Think back 30 years ago. Johnson was president. "Bonanza" was a top-rated TV show. "Up, Up and Away" by the 5th Dimension was blaring from transistor radios, and the median family income was less than $10,000.
If it seems like an entirely different world now, consider this. Just as public life has changed dramatically, so too has where the public goes out to have a meal and, therefore, so have the places where new restaurants stand the best chance of catching that traffic. This is the 30th year that the Restaurant Growth Index has been identifying those kinds of places. And while hot spots come and go, one thing is clear: the explosion of the industry has moved the battlefields to new frontiers, often away from yesterday's metropolises and into communities that may have been hard to find on a map back then.
And there are more of those communities. The first RGI examined 301 population centers; this year it's 320. Many of those areas wouldn't have raised a site selector's eyebrow 30 years ago. Santa Fe and Saginaw, two places on this year's top 10, weren't even recognized when RGI was born. This year's top three growth markets—Bloomington-Normal, IL; Cheyenne, WY; and Kalamazoo, MI—ranked 199th, 205th, and 130th respectively, in the first study.
That study, commissioned back when the magazine was called Fast Food and Howard Johnson's called its waitresses "Johnson Girls," pointed out hot markets like Philadelphia and Los Angeles. And while industry watchers say some big cities still have room for newcomers (Dallas and New York City made our top 25 this year), others clearly lost some of their hospitality as the years of building wore on. Philly and LA now rank 102nd and 147th, respectively. It also looks as though, more than ever, planners are taking the heartland to heart. Fifteen out of 25 states containing the top sites in the first RGI were coastal. Only four out of the top 25 are near the ocean this year, while states like Illinois and Michigan make four and seven appearances on that list, respectively.
Further, this inward-ho appears to be a comparatively recent phenomenon. In the pioneering RGI study, a hot spot meant a place with high sales figures, which were almost always cities. RGI didn't track demand until 1977, but its darlings remained familiar concrete landscapes led by Reno and Las Vegas. Ten years later in 1987 the same story emerged, with the top five picks being major cities. How is it that after years of dining downtown new wisdom advises not expanding there? Who in the big-city world of restaurant dining would have thought Cheyenne and Kalamazoo would make great markets?
"A couple of things have conspired to make the development of the C and D counties viable," reflects industry consultant Nancy Kruse. "The most obvious is the degree of saturation that exists in major metropolitan markets." But whether or not saturation drives chains into the hinterlands, the numbers can make them happy they've come. Comparing eating place sales of 1967 and today, New York City and Los Angeles have seen increases of 196% and 490% respectively. But in those same 30 years Cheyenne and Bloomington-Normal have racked up increases of 1,002% and 1,311%. Kalamazoo's eating place sales have gone from $21 million to nearly $403 million—an increase of 1,840%.
According to veteran foodservice consultant Malcolm M. Knapp, one of RGI's early engineers, these numbers were only a matter of time. "If you're going back 30 years, that's before the suburbs got really big everywhere. The big shift really was the network of interstate roads that changed where Americans could live. We de-centralized."
Restaurant Business saw that coming. With less than half of the interstate highway system built in 1968, we observed "the scramble for sites has already begun," and that "foodservice in the suburbs will grow and diversify."
RGI has called a few other things right, too. We saw the harbingers of home-meal replacement: "Take-out restaurant sales will increase with the increase of married women in the workforce." We sounded early warnings of the labor shortage: "Restaurant executives who once waited for employees to come to them are now out looking for people."
But if 30 years has brought manifold changes, the RGI also shows the difference only a year can make. Last year operators moaned about overcrowding. But this year's surging economy has brightened their tone a bit. In both the top and bottom markets this year (see p. 78 for a profile of each) operators said there's room for more comers.
That doesn't mean they're not worried about saturation. "If there are too many seats and not enough bodies to fill them in major markets," Kruse says, "as you press outward and downward you'll run into that same issue.
"There may appear to be a lot to eat in these less saturated communities," cautions Technomic's Dennis Lombardi. "But it doesn't take that many restaurants to come in before all of them stay hungry."