Restaurants Get the Recovery Party Started: Who's Already Expanding

Last Updated May 6, 2010 7:30 AM EDT

The gloom is slowly lifting in the restaurant industry, and the smart operators are already changing their game. Sales are growing again, and chains are raising prices, adding units, and planning to hire.

Often, restaurants are the first segment of retail to improve coming out of a downturn, so consider this your early-warning system. Moody's already raised the industry's outlook. A look at the restaurant chains that are already on the move, and what they're planning:

Raising prices: It's been a good long while since a major restaurant chain talked about raising prices. Who would dare, in this economy? Panera Bread (PNRA), that's who -- they reported last week prices have already inched up by 2 percent, contributing to a hefty 10 percent rise in its comparable-store sales. For its part, P.F. Chang's Bistro (PFCB) plans a "modest" price increase later this month in an effort to boost its profits, which sank in the first quarter.

Sprucing up: Capital spending in the industry is up, the National Restaurant Association reports. More operators are spending for new restaurant equipment -- 36 percent in March, up from 30 percent in February. Example: Chili's parent Brinker International (EAT) is spending $100 million upgrading its kitchens this year to get the food out faster, a clear sign they anticipate the crowds returning.

Opening new units: Chipotle Mexican Grill (CMG) is one of the chains with a big store-opening commitment for this year -- between 120 and 130 restaurants. Many smaller chains also have serious expansion plans, including Spicy Pickle (SPKL)

Hiring: Whataburger Restaurants, a 700-unit chain based in San Antonio, Texas, is among the chains that told the People Report Workforce Index they're looking to hire in the second quarter. The index is at its highest level in 29 months. More than 40 percent of the restaurants surveyed said they plan to add both hourly and management staff. Just 6 percent said they're cutting managers.

Growing sales: The NRA study showed average same-store sales for the big chains are up for the first time in 22 months. More than 40 percent of operators said traffic rose in March, up from 25 percent in February. Among them: Texas Roadhouse (TXRH), which saw sales up 5.5 percent in the first quarter.

Photo via Flickr user gsloan

  • Carol Tice

    Carol Tice is a longtime business reporter whose work has appeared in Entrepreneur, The Seattle Times, and Nation's Restaurant News, among others. Online sites she's written for include Allbusiness.com and Yahoo!Hotjobs. She blogs about the business of writing at Make a Living Writing.