Oct. 23, 2005

Locally owned restaurants battle chains

By Patti Zarling
Green Bay Press-Gazette

ASHWAUBENON — Restaurants come in many shapes, sizes and menu options, but they can generally be divided into two camps — chain vs. local stores.

Those who own local, or independent, restaurants say they offer regional appeal and local flavor; while those who own chains say people like to visit places they’re familiar with. With more restaurants coming to the Green Bay area, especially along Oneida Street in Ashwaubenon, eatery owners try to use the appeal of their places, whether local or chain, to draw in customers without getting eaten by the competition.

Larry Kempen, co-owner of the Backgammon Bar and Restaurant, estimates 38 new restaurants have opened their doors in the Oneida Street area in the six years he’s co-owned the Backgammon. He’s counted 104 places in the Lambeau Field/ Oneida Street area hungry folks can visit to satisfy almost any appetite.

Kempen and his partner focus on the 27-year-old restaurant’s traditional menu and décor to keep people coming back in. But competition from restaurants, especially a growing number of chain places, in the area has made things tough.

“We are so over-saturated,” Kempen said. “We really don’t need any more restaurants.”

Full-service restaurants are defined as places that have waiter/waitress service and where an order is taken while a patron is seated. They represent 52 percent of all restaurant sales in the United States. Growth in sales, particularly casual dinner places, are driven by the number of higher income households, according to the Center For Community Economic Development, University of Wisconsin-Extension.

The restaurant business has been growing at a healthy clip of 5 percent a year. But chains slowly have been edging out mom-and-pop type places in the $269.4 billion industry. Big chains had a 46 percent share of the market in 1991; slightly more than a decade later that number has increased to 50.6 percent.

Wisconsin has 15,459 restaurants, according to Ed Lump, president and chief executive officer of the Wisconsin Restaurant Association. Sales were $6.1 billion, and eateries employed 262,000 workers, he said. And the growth continues.

Much of that growth can be attributed to companies specializing in sit-down services such as Texas Roadhouse or Cheesecake Factory, industry experts say. While fast-food restaurants have seen profits increase by 4.7 percent, according to the Wall Street Journal, profits for the crop of sit-down places have skyrocketed an average of 30 percent to 35 percent.

So where does that leave the locally owned eateries?

Kempen said locally owned restaurants don’t have the corporate cushioning to ride out leaner times. That’s important now, he said, as people worried about the economy’s future have cut back restaurant visits.

“What’s one of the first things they can get rid of?” he said. “Going out to eat.”

Kempen said little guys also can’t afford TV advertising, and won’t have the exposure chain stores do from national ad campaigns.

Pat Buckley, who owns 22 Subway shops in Northeastern Wisconsin, most in Brown County, said that’s why he owns chain establishments.

“You really have the power of advertising and that national support,” he said. “They also do a lot of (research and development) on new products we could never do ourselves.”

As part of a chain, he can also purchase equipment and products at a better rate.

“Also, when people are coming from out of town, like to a Packers game, they’re more likely to go to a restaurant they’re familiar with,” Buckley said.

But he does have to pay a royalty fee and contribute to an advertising fund, Buckley said. And he has to stick with the same menu too.

“We can’t really try anything different,” he said.

Gary Tonn, who, along with his family, owns a number of Taco Bell restaurants, most of them in the Brown County area, agrees franchising a chain eatery isn’t for a chef who wants to create his or her own menu.

But as a businessman he appreciates the research and development the corporation does, and he can get better prices on food and supplies, and also the national advertising.

“They recently came out with a crunchy and chewy taco and they did lead-in advertising for a few weeks,” he said. “We checked our receipts the day they came out, and every other order had at least one crunchy/chewy taco on it.”

Being unique is one thing the Backgammon can do to stand out, Kempen agrees.

“We try to go for the hometown feel and atmosphere. Not really changing things and offering good food, like our perch,” said Kempen, who has co-owned the place for six years. “It’s the only way we can make ourselves stand out.”

He estimates 70 percent of his business is loyal customers who’ve been coming in “for years and years.”

But he knows as the population ages, the restaurant is going to have to build a new and younger customer base.

Lump said local restaurants can do lots to gain the attention of younger crowds that might initially lean to popular chain establishments.

“Drive-by appeal is very important for the local places,” he said. “The public can be swayed to go to another place if the exterior and signage is attractive.”

That means parking lots should be well-kept and marquee signs “must have all the letters of the alphabet,” Lump said.

Chains, he noted, spend lots of money on small details such as training workers and keeping up restaurant interiors.

Local restaurants, though they may need to drop some extra cash, can attract visitors if they also focus on quality service and don’t let their building’s interior run down.

“Eye appeal, a nice sign, a good paint job and service go a long way,” Lump said.

Sometimes, local restaurants may tweak their menus to adapt to what the chains bring in, he said.

That’s the case for Kroll’s, the popular local sit-down burger place, which has stores both on Green Bay’s east side and on Ridge Road in Ashwaubenon. Debbie Cuene, manager of Kroll’s West, said they added wrap sandwiches to the menu, in part because the sandwiches are popular at other places.

But she doesn’t worry too much about the growth of chain places.

“We’ve been around for such a long time and have a good name,” she said. “We compete with our prices and our food.”

Lump said the Green Bay area should expect to see an increased number of chain restaurants.

“There’s the traffic volume and patterns they are looking for,” he said. “And now that most of the larger markets are saturated, they’re going to turn to smaller markets, in most cases with limited concepts of the stores they have in the larger cities.”

And they like to follow each other into new markets, Lump said, “They tend to do each others’ market analysis.”

Still, local eateries can benefit, he insisted.

“Bringing more restaurants, whether they’re chain or independent, can generate interest in an area,” Lump said. “And even if they don’t stop at the independent restaurant this time, if they see it and they’re interested, they likely will come back to check it out.”

©Green Bay Press-Gazette 2005

 

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