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Some Local Restaurants Are Setting A Course For Expansion

September 2011

San Diego Business Journal  |  Written by Lou Hirsh

Despite a national economy that one research firm says is taking the biggest bite out of independently run eateries, some San Diego-based restaurant operators are actually growing their presence with new locations.

Premier Food Concepts, LLC this month will open its fifth Luna Grill in Eastlake, with a sixth set to debut at Liberty Station in November. Donovan’s Steakhouse earlier this year debuted a seafood-focused format at its third restaurant that opened downtown in 2010, and Cohn Restaurant Group Inc. plans to launch its 15th restaurant at an Escondido Lexus dealership in early 2012.

The expansions come as New York-based NPD Group Inc. reports that U.S. restaurant locations in operation declined by 2 percent over the past year, for a loss of 9,450 restaurants. The bulk of the declines were among independent eateries, which lost a net 8,650 locations while the ranks of chain locations remained relatively unchanged.

NPD’s annual restaurant census found the same general trends holding true in the San Diego metro area, with chain locations dropping 1 percent while independents declined 3 percent. Local independent eateries still outnumber chain locations by a count of 3,301 to 3,000.

Greg Starzynski, an NPD director who tracks the food-service industry, said the national decline in independent units was the steepest the company has seen since it began the census in 2001. “A volatile economy, more frugal consumers, and a lack of financial backing have made it a difficult business environment for independent restaurants,” he said.

In spite of the challenges, established local operators say they’ve found ways to remain financially viable and competitive with national chains, and ultimately grow their local presence.

At Premier Food Concepts, Chief Executive Officer Sean Pourteymour said the recipe includes keeping close watch on fluctuating commodity prices and making necessary menu adjustments that allow the company’s Luna Grill eateries to maintain quality. The private company posted 2010 sales of around $3 million, and Pourteymour said it will set its sights next year on the Orange County market.