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Restaurants Showing Signs of Recovery From Sales Slump

The local lodging industry isn’t likely to run out of pillow mints , occupancy is expected to be down this year compared to last. But the outlook is for improvement in 2010.

The economic downturn has taken a significant toll on the restaurant industry as well.

Steve Zolezzi, executive vice president of the San Diego Food & Beverage Association, a trade group that counts 500 members, says that last year eateries reported sales were off 20 percent to 30 percent.

“Now they’re saying sales are down 5 percent to 10 percent, so that indicates some stabilization,” he said.

Nonetheless, many restaurants have been shuttered within the last year, and the tight lending climate has halted the flow of newcomers that traditionally were able to reopen where others failed, he pointed out.

Borrowing money to start a restaurant has always been next to impossible. Banks shied away from startups, considering them high risk. Yet successful operations with a proven track record could get financing for expansion or remodeling. Now companies have to find their own capital, he says.

Nobody tracks the total number of eateries that go out of business. Some are able to list their businesses for sale through brokerages, but that’s only if they have an asset that’s worth something, such as a favorable lease rate.


Grocery Stores Benefiting

High-end eateries have suffered the most in the downturn. On the flip side, burger restaurants and fast-food chains are doing well, and a lot of the more fancy establishments are lowering prices, he added.

Statistics show that grocery stores have profited the most in the current downturn as people opt to eat in to save money.

There are 10,000 establishments in the county that serve food and beverages, including shopping mall kiosks and food courts, schools and hospitals.

The Gaslamp Quarter has the highest concentration of bars and restaurants , 100 in 16.5 blocks. According to Heather Ashby, marketing manager of the 400-member Gaslamp Quarter Association, drinking and dining emporiums have closed there as well.

Others stepped in to replace them, and while it was once assumed that more deep-pocketed national chains would come in and give the quarter a shopping mall feel, local and regional operators still dominate the scene, she says.

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