Read this article below from the Dallas Morning News May 20, 2010 issue featuring Snap Drape International
If the recession has been like a long cold winter blanketing the restaurant industry, think of table linens and meat grinders as tulips.
Green shoots are popping up across the $390 billion restaurant industry, often in the form of accessories and equipment that were more often catalog pictures than purchased goods during the downturn.
Orders are up at several North Texas companies that sell restaurant furniture, equipment and other nonfood items. That’s led to cautious optimism as they head to Chicago this weekend for the annual restaurant trade show sponsored by the National Restaurant Association.
“We’ve seen our bookings begin to climb back up,” said Darrin Garlish, president and chief executive of Carrollton-based Snap Drape International, which makes table linens for restaurants, hotels and country clubs. “I’m going to stay very optimistic that there will be more decision makers [at the show]. I’m hoping they’ll be back to peek under the hood.”
The recession saw consumers’ torrid love affair with restaurants cool considerably, pushing industry sales down an inflation-adjusted 1.2 percent in 2008 and 2.9 percent in 2009.
That in turn forced restaurateurs to put nearly all discretionary spending on hold, including what’s known in the trade as FFE: furniture, fixtures and equipment.
“There is definitely pent-up demand among restaurant operators for FFE purchases,” said Hudson Riehle, senior vice president of research for the restaurant association, the industry’s largest trade group.
Nearly half of 500 restaurant operators surveyed in April said they plan to spend money on equipment, expansion or remodeling in the next six months – up from 43 percent in March and “the strongest level in two years,” Riehle said.
The Irving-based operator of Chuck E. Cheese’s restaurants is planning to spend $67 million this year on capital improvements, with a “significant portion” on furniture, fixtures and equipment, said Brenda Holloway, a spokeswoman for CEC Entertainment Inc.
Restaurateurs are reacting in part to signs that consumers are ready to come out of the bunker.
Same-store sales at 47 restaurant chains tracked by the NPD Group Inc. have improved in seven of the last nine weeks.
“This is one of the recovery signs we’re beginning to see in the restaurant industry,” said spokeswoman Kim McLynn.
In anticipation that the worst is over, suppliers are cranking up production.
At Garlish’s shop, colorful napkins, skirts for banquet tables and other linens are sewn on demand – only when orders come in.
So far this year, increased orders have pushed sales up by 15 percent as independent restaurateurs and hotels boosted spending.
“Companies are loosening up the purse strings,” Garlish said.
Compare that to July 2008. “It was like a light switch went off,” he said. “Business dropped 25 percent.”
Garlish, who has been with the company for 25 years, said revenue at the privately held company was more than $12 million last year, compared with more than $15 million in 2008.
With the steep drop in orders, the company laid off 20 workers, or 25 percent of the staff. Other workers faced pay cuts.
In November, “we started seeing things looking better,” he said. “In January, it really started to sink in.”
Nick Ades is director of hospitality sales for Coppell-based Woodard Furniture, a subsidiary of Craftmade International. Woodard also is among 31 North Texas companies planning to exhibit at the restaurant show.
Ades, whose company supplies outdoor furniture used in hotels, country clubs and common areas of assisted living facilities, is expecting to see increased foot traffic at the show to match what he sees as growing demand.
“There’s an overall sense that we’re breaking through this thing,” said Ades, adding that in the past six months hospitality sales have been more consistent.
During the downturn, “we’d go three weeks with a flurry of orders, and then it would get quiet,” he said.
He speculated that sales would pick up even more if bankers would boost the flow of cash.
“It’s financing that’s inhibiting us from coming out of it,” Ades said. “For the people that have money, they’re in a good position now because the cost of materials and labor is low.”
Mike McNeer, director of sales and marketing for Dallas-based Thunderbird Food Machinery Inc., said sales at his company dropped only slightly during the downturn. And he attributes at least part of that to a cutback in advertising and marketing.
McNeer, whose company sells items such as meat grinders, gear-driven food mixers, bone saws and bread slicers, said 2008 “was a really good year for us. 2009 was slower.”
In 2008, the company shipped at least three to five high-end machines a week, with some costing up to $30,000. “In 2009, it slowed down to maybe one or two” a week, he said.
So far this year, the company’s been selling more meat grinders, a stainless steel machine that can cost less than $1,000. And there’s more demand for parts, as restaurant operators try to shore up equipment they already have.
Though McNeer’s company was not among the hardest hit by the economic implosion, he thinks the bounce back will bring his firm additional sales.
As restaurateurs are “looking at ads for any other kind of equipment, they’re going to see ads for Thunderbird, and that’s going to increase our sales,” he said