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Restaurant Expansion Heats Up as Economy Warms Up

San Diego County’s longtime restaurant operators managed to survive when the economy was at its worst, and are now adding locations as budget-minded diners regain their appetite for food away from home.

Several locally based companies already had multiple sites and are now boosting their footprints as the economic climate improves. The long list includes Burger Lounge Restaurants, which expects to have three new locations up and running by early 2013, bringing its total to 11; and Bazaar del Mundo Restaurant Group, which plans to open its fourth local Mexican-style eatery in Carmel Valley by April.

Melluso Enterprises Inc. recently opened its fourth local location, and 12th nationally, of the Tin Fish seafood restaurant in Oceanside. Also this year, locally based Cohn Restaurant Group Inc. debuted Vintana in Escondido and 100 Wines in Hillcrest, bringing its local total to 15 restaurants; and Enlightened Hospitality Group LLC opened three restaurants, the latest of which was Herringbone in La Jolla, its fifth local eatery.

Industry experts note that mid-priced, limited-service restaurants appear to be faring best in the current economic climate in terms of recovering sales since the recession ended. However, the trend of location growth by established local restaurateurs has recently cut across menu categories, price points and service styles.

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Restaurant industry veteran J. Dean Loring, CEO of Burger Lounge Restaurants, said the fast-casual gourmet burger category generally fared well during the recession, and the firm bolstered its customer base by emphasizing eco-friendly elements including beef derived from grass-fed cattle, and adding salads and other health-minded menu items.

The company now employs approximately 250 people at its restaurants and support facilities in San Diego and Los Angeles counties. Its seventh local eatery will debut by February at Flower Hill Promenade near Del Mar, and it continues to scout locations for future expansion in North County, West L.A. and Orange County.

Growth Mode

Burger Lounge has been in growth mode since its 2007 debut, and Loring said tough times provide fodder for future expansion of established players, as a larger variety of quality locations become available at favorable terms. “People come to you with potential locations, more so than would be the case if you were a startup operation or if you only had one restaurant.”

Another longtime local restaurant operator, Bazaar del Mundo owner Diane Powers, said a confluence of factors is boosting local growth by established companies. Increasingly sophisticated consumers are seeking alternatives to national chain restaurant brands, and they now have more disposable income.

“People these days are very busy and looking to go out to eat again,” said Powers, who currently operates full-service Mexican restaurants Casa de Pico in La Mesa, Casa Guadalajara in Old Town and Casa de Bandini in Carlsbad. “There was also some pent-up demand because of the recession.”

But the seeds of expansion are generally sown during tougher times. In 2009 Powers was able to debut Casa de Bandini in a high-profile spot at The Forum retail center in Carlsbad, which had been vacated by another local operator.

In early 2013, she plans to open Casa Sol Y Mar in Carmel Valley, with a family-friendly blend of regional Mexican cuisine and live entertainment, which will bring her company’s employee total to approximately 400. Powers’ firm has embarked on an extensive renovation of the 7,000-square-foot space at Del Mar Highlands Town Center that was vacated earlier this year by Red Robin.

Conditions Are Stabilizing

“Sometimes you don’t necessarily wait for the market to improve before you grow,” Powers said. “Sometimes you do your planning for future expansion when things are a little down.”

According to research firm The NPD Group, national restaurant industry conditions have generally been stabilizing in recent months. However, while the quick-service segment has seen foot traffic growing, the full-service category as of mid-2012 was seeing a continuation of a four-year streak of losses in restaurant visits.

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