While many industries in Maryland have struggled to add, or even hold onto, workers this year, restaurants have been hiring in recent months, according to labor department figures.
Still, many restaurateurs are struggling. Only 19 percent in the state reported higher same-store sales in August, while 59 percent reported a sales decline, according to a National Restaurant Association survey released by the Restaurant Association of Maryland.
Overall sales at Maryland restaurants during the first eight months this year were down 0.1 percent from last year to $5.86 billion, according to an analysis by the restaurant association of figures from the state Comptroller's Office. Sales declines were seen in Montgomery County and Baltimore city, while Prince George's and Frederick counties posted gains.
Still, some in the fast-casual segment have done well during the 22-month recession which is now over, at least according to a survey of 44 economists released this week by the National Association for Business Economics. Chains such as Qdoba Mexican Grill, Noodles & Co. and Potbelly Sandwich Works have added new restaurants in Maryland this year.
The high-quality, fresh food offered at affordable prices by Qdoba has enabled the company to thrive during lean economic times, said Richard Pawlowski, owner of six restaurants in Montgomery, Prince George's, Howard and Anne Arundel counties, plus three in Washington and Northern Virginia. Ones in Silver Spring and Falls Church, Va., have opened this year.
As the Qdoba franchisee for the Washington region, Pawlowski is scouting several new locations and said he has signed a lease for another in Crofton, with two more in the works in Montgomery County. He said he hopes to be up to 13 to 16 restaurants by the end of next year.
"People understand our product," said Pawlowski, who has offices in Wheaton and New York City. "We make everything fresh every day, and we charge a fair price."
Finding the right real estate for a restaurant in Montgomery can be challenging, Pawlowski said. But rates have become more competitive during the recession, he said. Each restaurant has from 18 to 25 employees.
Financing can also be a challenge in down times. But Pawlowski, a native of the U.K. who developed his taste for Mexican food while working as a consultant for businesses in the Western U.S., said he has had success with community banks.
"They understand the local market very well," he said.
Being a locally owned franchisee, rather than an eatery owned by an out-of-state chain, helps build community relations, Pawlowski said. Qdoba, a wholly owned subsidiary of Jack in the Box with more than 500 restaurants nationally, works on community projects with schools, colleges and others.
A restaurant's business can be affected by circumstances beyond owners' control, such as a decline in traffic at Westfield Montgomery mall in Bethesda or construction in downtown Silver Spring, said Pawlowski, who was a developer for W Hotels and holds a master's in business administration from Harvard University and one in engineering from the University of Oxford. The customer base at the Rockville Qdoba has grown each year since opening in 2006, he said.
Growth driven by fast-casual segment
In Maryland, seasonally adjusted employment in the food services and accommodations sector rose 1.6 percent in August from a year earlier, according to figures from the state labor department. Food service was one of the few private industries to add jobs that month in Maryland, as the number of overall jobs declined by 2.4 percent.
The fast-casual segment has driven industry growth during the recession, analysts say. Sales for the largest 100 fast-casual chains grew 10.8 percent in 2008 to $16.7 billion, compared with 3.4 percent growth at the 500 overall largest U.S. restaurant chains, according to Chicago food service consulting company Technomic.
Owners of fast-casual chains are being pushed toward higher standards by the recession, Darren Tristano, Technomic executive vice president, said in a statement. "Leaders are innovating by introducing new value-priced menu items, retooling menus to boost sales during slower day parts and developing new programs like catering and selling retail packaged goods to supplement the bottom line," he said.
Chipotle, a key competitor of Qdoba in the fast-casual segment, opened 50 new restaurants nationally in the first half of the year, down from 77 in the same period last year. But comparable restaurant sales increased 1.9 percent in the first six months, while net income rose 46 percent to $60.8 million.
Other fast-casual players have opened new sites in Maryland recently. Noodles & Co. plans to open its 13th restaurant in Maryland next week at Westfield Montgomery mall. The restaurant plans a pre-opening fundraiser Thursday to benefit music programs at Walter Johnson High School.
Rather than trying to boost sales through discounting and value meals, Noodles & Co. believes in emphasizing its everyday value, said spokeswoman Jill Preston. The company has 218 restaurants in 18 states and expects 10 percent to 15 percent unit growth this year. Same-restaurant sales have grown this year, Preston said.
"Our small bowls are just $4.25, and our regular bowls are just $5.25," she said. "Similar to casual dining but without the 15 to 20 percent tip, we serve our guests on real china with real silverware and also clear the table."
Potbelly also opened a new restaurant in Baltimore recently.
Fast-food chains such as McDonald's have reported year-over-year same-restaurant sales growth recently. McDonald's national comparable sales were up 1.7 percent in August and 2.6 percent in July, following a 3.5 percent rise in the second quarter.
Others, especially in the full-service category, have not fared as well. U.S. same-restaurant sales fell 2.9 percent at Olive Garden and 7.9 percent at Red Lobster in the quarter that ended Aug. 30, according to parent Darden Restaurants.
Maryland jobs Employment change, seasonally adjusted, August 2009 from August 2008:
-Health care, +2.2 percent
-Food service and accommodations, +1.6 percent
-Professional, scientific and technical services, +0.9 percent
-Retail, -4.7 percent
-Manufacturing, -4.8 percent
-Arts, entertainment and recreation, -5.3 percent
-Finance and insurance, -7.0 percent
-Real estate, -8.9 percent
-Construction, -16.1 percent
Source: Maryland Department of Labor, Licensing and Regulation