Although the number of restaurants opened in the U.S. in the past year is flat—growing just 0.4 percent—tourism continues to be the driving factor in areas with the strongest growth. And while two of the top five markets are beach destinations, a deeper dive shows that a return to the roads also is driving consumers to restaurants in small towns that sit at the crossroads of major highways.
These are among the findings of the 2015 Restaurant Growth Index, an annual ranking of growth by market, compiled exclusively for Restaurant Business by Nielsen, a global provider of information and insights.
The fairly constant growth in the restaurant industry is a sign of stability after the turbulent years of the Great Recession. Roughly 2,922 new restaurants opened in the U.S. between 2014 and 2015, and total restaurant sales grew by 0.8 percent to roughly $550 billion.
Despite slow growth nationwide, restaurant spending topped that of supermarkets for the first time since Nielsen started tracking in 1992. This speaks to economic recovery and a fundamental shift in consumers’ eating habits.
As people’s schedules become increasingly packed and technology challenges in-person connections, the role of restaurants in consumers’ lives has become more prominent. Restaurant outings no longer are reserved for special occasions, rather they provide a gathering experience in addition to a meal. This is especially true for hypersocial millennials looking for communal, away-from-home space to congregate.
Not all parts of the country are equal when it comes to restaurant patronage and growth. In tourism-focused areas such as Nevada and Hawaii—the top two states once again in the RGI—visitors remain an important target, with the number of tourists often exceeding the resident population.
But sandy beaches and glitzy boulevards aren’t the only draw. The biggest jumps in the rankings come from markets at the intersections of key roadways. For example, Dumas, Texas, which sits at the crossroads of three highways, jumped 339 spots this year to No. 326.
The best markets for restaurant growth
The influence of tourism on restaurant growth is evident. Additionally, residents in the top RGI-ranked markets are more likely than the average U.S. consumer to frequent both QSRs and full-service restaurants.
No. 1: Kahului-Wailuku-Lahaina, Hawaii
Holding onto the top spot from 2014, this Maui locale had sales of almost $5,000 per capita. The area’s beaches attract 212,000 visitors per month, according to the Hawaii Tourism Bureau, bringing strong demand for restaurants. While Lahaina is known for luxury resorts with high-end restaurants, says Giovanni Cappelli, owner of Bistro Casanova in Kahului, his area differs in quantity and price range of restaurants.
No. 2: Kapaa, Hawaii
The island of Kauai has shopping centers, water sports and a high concentration of restaurants that cater to visitors. But it’s not the typical tropical hot spot. Named by Forbes as one of America’s Prettiest Towns, the magazine notes that Kapaa still has a small-town Polynesian feel with a strong local connection, void of the typical tourist giveaways such as high rise-strewn beaches. This authentic Hawaiian character appeals to both residents and tourists.
No. 3: Las Vegas, Nev.
Similar to Hawaii, Las Vegas restaurant sales are driven by tourism, with an average of 3.4 million visitors per month, according to the Las Vegas Tourism Bureau. The region, though still recovering from the economic downturn, has almost 5,000 restaurants. And it’s not just the celebrity-chef spots drawing attention; when White Castle first opened in Las Vegas in January, it was so mobbed that the store had to close down to regroup.
No. 4: Sevierville, Tenn.
Famous for more than being the home of Dollywood, Sevierville is going through a growth spurt right now. Not only is the ode to Dolly Parton expanding, but large retail brands and an 18-cinema complex are moving in, helping traffic during nonpeak months, says Ed Saunders, managing partner of the Texas Roadhouse location in the area. And the boost has helped Sevierville rise from the No. 5 spot on the RGI charts in 2014 to the No. 4 spot this year.
No. 5: Starkville, Miss.
Home to Mississippi State University, Starkville jumped from No. 11 in the RGI ranking in 2014 to claim the No. 5 spot this year. This college town has put an increasing emphasis on dining over the past few years with lots of hungry college students and football fans to feed. Starkville launched a Restaurant Week in 2013, which has been expanded in 2015 due to overwhelming popularity.
5 worst places to open a restaurant
Sales per restaurant
Los Alamos, N.M.
$498,086
Urbana, Ohio
$498,200
Sunbury, Pa.
$471,490
Boone, Iowa
$513,773
North Vernon, Ind.
$523,595
Restaurant growth by state
Largest markets
New York-Newark (includes NY-NJ-PA)
693 | $682,227
Los Angeles-Long Beach, CA
434 | $764,198
Chicago (includes IL-IN-WI)
542 | $789,696
Dallas-Fort Worth-Arlington, TX
502 | $803,389
Houston-The Woodlands, TX
657 | $763,333
Washington, D.C. (includes VA-MD-WV)
647 | $928,302
Philadelphia (includes PA-NJ-DE-MD)
775 | $689,053
Miami-Fort Lauderdale, FL
398 | $791,357
Atlanta-Sandy Springs, GA
556 | $752,521
Boston-Cambridge-Newton (includes MA-NH)
641 | $805,043
Insights from restaurateurs in top markets
Northeast
“We are in a region [Berlin, NH-VT] that is depressed, but it is reinventing itself. In the past, we were relying on one paper mill for our economy. Now, our tourism industry is growing. We have ATVers, snowmobilers and hikers.”
—Magdalena Randall, owner of Polish Princess Bakery in Lancaster, N.H.
Midwest
“We’ve actually noticed an increase in tourism here. There are a few stores that have opened west of us that have brought more people to the area ... We get a lot of customers from the interstate; the hotels will send them our way. Southern Illinois has a huge amount of small towns. Mount Vernon is the larger hub that brings in business from the 15 to 20 smaller cities.”
—Dan Hamilton, owner of The Frosty Mug Bar and Grill in Mount Vernon, Ill.
“Branson has been an especially important market for us. We first opened Cantina Laredo at Branson Landing in 2006. We have since opened Black Oak Grill in the same market. Branson is a drive-in tourist destination, which gives our brands extraordinary exposure.”
—Bill Watson, VP of marketing for Consolidated Restaurant Operations, parent of the Cantina Laredo and Black Oak Grill chains
South
“[Salisbury] is a strong market combining a solid agricultural industry and Salisbury University ... a great source of customers and employees.”
—Bob Barry, CEO and president of 43-unit The Greene Turtle Sports Bar & Grille
“Starkville and the area around Mississippi State University have grown at a rapid pace in the last few years, and it’s ramping up for future growth. The economic development successes we’ve had in the Golden Triangle (Columbus, West Point, Starkville) combined with the continued rapid growth of our student base have put us in a unique position nationally. If you are a serious restaurateur, you can have immediate success in this market.”
—Jay Yates, chef-owner of The Veranda Restaurant in Starkville, Miss.
"Sevierville and Pigeon Forge are booming right now—double-digit growth. Dollywood is expanding, and many new big-name businesses are moving into town. It’s still seasonal, but staying at better volume during the slow months … Both local traffic and tourism are growing, because there are some big brands coming in. There’s a Hobby Lobby and an 18-cinema complex being built so more people are moving in and traveling here. I’ve been living here two years, and in that time I’ve seen so much more growth.”
—Ed Saunders, managing partner of Texas Roadhouse in Sevierville, Tenn.
West
“Kahului is the commercial hub of Maui, with its airport, harbor and most of its big-box retail operations. Recently, it’s humming with new commercial developments and public works. It seems that most of the restaurant offerings are mainland-based chain operations. [There are a] few mom-and-pop outlets, some long-term established private eateries and very few high-end establishments. Kahului does not have a significant residential base, but new housing projects are in the pipeline.”
—Giovanni Cappelli, owner of Bistro Casanova in Kahului, Hawaii
“Reno’s got the population, the location and the favorable business environment that helps attract new businesses and residents. With Tesla coming to town, it’s also bringing a lot of attention, jobs and people.”
—Shila Morris, co-owner and president of 5-unit Squeeze In
Full list to come.
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