Making a dime on thrifty diners
Restaurateurs across the nation are conducting focus groups, cooking up promotional campaigns and generally struggling in vain to get their old diners to start eating out again.
Then there is Mary Harrigan, whose small local chain of five Stonefire Grill restaurants seems to be operating in some alternate world where there is no recession, no burst housing bubble and plenty of disposable income in consumer wallets. A recent Friday in West Hills was typical, with a sizable lunchtime crowd of old regulars and relative newcomers.
Harrigan’s small-business success comes in part from remembering how she grew up in a San Fernando Valley family that stretched every dollar to send all nine children to private school and college. Her low-cost, no-frills eateries, which she runs with sister Maureen, strike a chord with customers who are worried about the worsening economy and their own financial futures.
“We had to be very selective about how we spent money, and that is how everyone feels today,” said Harrigan, number eight in the brood.
The Westlake Village-based fast-casual chain is doing well enough to proceed with plans for a sixth restaurant in Pasadena. That’s unusual in an industry that’s hungry for business.
“Nearly 2 out of 3 restaurant operators reported negative same-store sales and traffic levels in September, while 50% expect their sales in six months to be lower than the same period last year,” said Hudson Riehle, the National Restaurant Assn.’s senior vice president of research and information services.
Technomic, a restaurant research and consulting firm, said the industry was suffering from several problems.
Restaurants overbuilt by opening eateries faster than they were gaining customers. That left them with too many seats to fill and too few customers to go around when the economy tanked. Restaurant supply costs also have gone up faster than operators can raise prices, said Darren Tristano, executive vice president of Chicago-based Technomic.
But Stonefire seems well-positioned to take advantage of some of the trends that are hurting many restaurants. More people who used to eat out are building meals using less expensive prepared foods from supermarkets. Stonefire’s main dishes -- mesquite-grilled tri-tip or chicken cooked with lemon and garlic, for instance -- go well with supermarket side dishes, some of the restaurant’s customers say.
Here’s how Harrigan describes Stonefire:
“We are a fast-casual, order-at-the-counter, get-your-own-drink and get-your-own-condiments style of restaurant. We take care of the rest ourselves. Our menu is simple. The service is simple. We make really good meals that you could make at home but are better than what you might have prepared.”
Harrigan got her first industry experience at age 16 when she began working at an Encino bagel shop and restaurant that was within walking distance of her home. There she discovered how much she loved the work, particularly all of the new people it enabled her to meet. She later earned a degree in psychology, but she always found herself drawn to the idea of running a small group of restaurants.
“I discovered I loved the food-service industry and interacting with people,” Harrigan said.
Most of her 500 employees are teenagers or college students who put in only a few hours a week. That low labor cost helps Harrigan keep her prices down, she said.
Tips are optional, and especially during these times, Harrigan said, customers seem to appreciate the ability to keep a little more money for other things.
For dinner for a family of four, a common order is a choice of barbecue or lemon garlic chicken, medium-size salad and 12 breadsticks for $21.99 to $22.99, Harrigan said.
Between the five Stonefire grills in West Hills, Chatsworth, Fountain Valley, Irvine and Valencia and the full-service restaurant the sisters run in Santa Clarita, the Rattler’s Barbecue, Harrigan said she would gross about $30 million this year, which would be about the same as last year. Harrigan says that 10% to 50% of Stonefire customers are buying takeout, depending on the location.
“We are seeing a little bit of our catering is off. We have picked it up in our takeout department. Overall sales are very good. We are really fortunate,” Harrigan said.
Part of that has come from drawing new customers who find that feeding their families at Stonefire is more economical than dining out at a traditional full-service restaurant. Long-time customer Janine McCluskey said Stonefire was the one option for dining out or takeout that her family hadn’t eliminated.
McCluskey, her husband and two daughters used to celebrate as many as four birthdays with separate restaurant dinners. Now, she says, the family combines those celebrations into one event.
Stonefire, she says, fits in nicely for at-home dinners where the family and her daughters’ fiance and boyfriend don’t have to feel like they are sacrificing by not dining out.
“I can go to Costco and get side dishes and less expensive beverages and have that with their tri-tip and chicken. For the six of us, $60 will cover us instead of the $120 to $200 we would spend dining out at a traditional restaurant,” said McCluskey, who manages the small Civic Arts Plaza Federal Credit Union in Thousand Oaks.
That’s the kind of talk Harrigan loves to hear.
“We have tried to capitalize on that need for a family to have something special that isn’t too expensive,” Harrigan said. “We are picking up on a market where people want to feel like they are spending their money well.”
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(BEGIN TEXT OF INFOBOX)
Eating it up
Business: The Stonefire Grill fast-casual restaurants in Southern California are expanding while other chains struggle. The operation also includes Rattler’s Barbecue in Santa Clarita.
Owners: Mary and Maureen Harrigan
Employees: 500
Revenue: $30 million estimated for 2008
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What’s working: The restaurants are feeding diners’ desire for low-cost meals they can combine with supermarket side dishes.
