OAKBROOK TERRACE, Ill. -- Although the number of restaurants opened in the United States in the past year is flat—growing just 0.4%—tourism continues to be the driving factor in areas with the strongest growth. And while two of the top five markets are beach destinations, a deeper dive shows that a return to the roads also is driving consumers to restaurants in small towns that sit at the crossroads of major highways.
These are among the findings of the 2015 Restaurant Growth Index (RGI), an annual ranking of growth by market, compiled exclusively for Restaurant Business magazine by Nielsen. Restaurant Business is a companion publication to CSP Daily News and CSP, Convenience Store Products andFoodService Director magazines.
The findings should also be of interest to convenience-store retailers in markets of all sizes that are improving and expanding their foodservice programs.
Not all parts of the country are equal when it comes to restaurant patronage and growth. In tourism-focused areas such as Nevada and Hawaii—the top two states once again in the RGI—visitors remain an important target, with the number of tourists often exceeding the resident population.
But sandy beaches and glitzy boulevards aren’t the only draw. The biggest jumps in the rankings come from markets at the intersections of key roadways. For example, Dumas, Texas, which sits at the crossroads of three highways, jumped 339 spots this year to No. 326.
The best markets for restaurant growth
The influence of tourism on restaurant growth is evident. Additionally, residents in the top RGI-ranked markets are more likely than the average U.S. consumer to frequent both QSRs and full-service restaurants.
1. Kahului-Wailuku-Lahaina, Hawaii. Holding onto the top spot from 2014, this Maui locale had sales of almost $5,000 per capita. The area’s beaches attract 212,000 visitors per month, according to the Hawaii Tourism Bureau, bringing strong demand for restaurants. While Lahaina is known for luxury resorts with high-end restaurants, says Giovanni Cappelli, owner of Bistro Casanova in Kahului, his area differs in quantity of restaurants as well as in price range at restaurants.
2. Kapaa, Hawaii. The island of Kauai has shopping centers, water sports and a high concentration of restaurants that cater to visitors. But it’s not the typical tropical hot spot. Named by Forbes as one of America’s Prettiest Towns, the magazine notes that Kapaa still has a small-town Polynesian feel with a strong local connection, void of the typical tourist giveaways such as high rise-strewn beaches. This authentic Hawaiian character appeals to both residents and tourists.
3. Las Vegas. Similar to Hawaii, Las Vegas restaurant sales are driven by tourism, with an average of 3.4 million visitors per month, according to the Las Vegas Tourism Bureau. The region, though still recovering from the economic downturn, has almost 5,000 restaurants. And it’s not just the celebrity-chef spots drawing attention; when White Castle first opened in Las Vegas in January, it was so mobbed that the store had to close down to regroup.
4. Sevierville, Tenn. Famous for more than being the home of Dollywood, Sevierville is going through a growth spurt right now. Not only is the ode to Dolly Parton expanding, but large retail brands and an 18-cinema complex are moving in, helping traffic during nonpeak months, says Ed Saunders, managing partner of the Texas Roadhouse location in the area. And the boost has helped Sevierville rise from the No. 5 spot on the RGI charts in 2014 to the No. 4 spot this year.
5. Starkville, Miss. Home to Mississippi State University, Starkville jumped from No. 11 in the RGI ranking in 2014 to claim the No. 5 spot this year. This college town has put an increasing emphasis on dining over the past few years with lots of hungry college students and football fans to feed. Starkville launched a Restaurant Week in 2013, which has been expanded in 2015 due to overwhelming popularity.
To view more details on the best—and worst—markets to open a restaurant, including geographic breakdowns, analysis and road-tripping insights, click here for the full Restaurant Business report. And click here to view the full Restaurant Growth Index.
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