Dining pleasure: Tyler's restaurant market ranks in Top 10 in state

Published on Saturday, 8 February 2014 23:08 - Written by Casey Murphy cmurphy@tylerpaper.com

Jeff Powell knew Tyler would be the perfect town for Razzoo’s Cajun Cafe.

“The dining business in Tyler and East Texas is strong,” said Powell, president and chief executive officer of the chain.

Powell, 50, said he looked at dining frequency, disposable income and the desire to dine out when deciding to come here.

“Tyler is booming,” he said.

After being open for about a month, business is great.

“It’s crazy busy,” he said.

Razzoo’s is just one of several chain restaurants opening in Tyler in the past year. Others include Raising Cane’s and Firehouse Subs.

New locally owned restaurants include Juls, which replaced Julian’s; El Charro on The Ridge; Bistrolls; Asian Grill; Annie Mae’s Soul Food; Graciela’s Cuisine and Caf← Bhojana Java.

Bob Westbrook, past president of the Texas Restaurant Association and current president of its East Texas chapter, said Tyler’s restaurant market ranks in the Top 10 of cities in the state as far as performance and is at the “top of the heap” in the country when chains are looking for new locations.

He said restaurants’ perform higher in gross dollars in Tyler than nearly any city in the state. For example, Chili’s, which has one store here, does higher sales than most Chili’s across Texas.

Westbrook said chains, such as Razzoo’s, normally wouldn’t come to a city this size. He said many national chains use consulting companies to help match their brand with an area’s demographics.

When people first look at the demographics here, they don’t understand how so many restaurants can be here and do so well, he said.

Cities of similar size, such as Beaumont, are doing well because of other industries but are still not attracting chain restaurants as Tyler does. Westbrook believes it is because of Tyler’s diverse economy and swelling daytime population.

“Tyler still is a shining star,” he said.

Sam Smith, who opened Chris & Sam’s Bar & Grill in December, believes the medical community here has drawn in a lot of people who make good money. She said there also is a large retirement community and a lot of people eat out at least once every day.

“It’s all about disposable income,” she said.

Mrs. Smith said there are not many cities of similar size that are comparable to Tyler when it comes to a nice place to live and raise a family. The corporate “big boys,” such as BJ’s Brewhouse, Chuy’s and Razzoo’s, wouldn’t consider coming to town unless the market here can support it, she added.

“It says something for Tyler that we have as many restaurants as some cities five times our size,” she said.

 

HARD BUSINESS

Westbrook said restaurants are one of the hardest businesses to start. They operate on the smallest of margins of any industry, he added.

Two of the oldest restaurants in town, both Gilbert’s El Charro locations, closed last year, as well as Joseph’s Restaurant & Catering and Heartland Ham. Other closures included Tyler Ranch Bar & Grill and Zaza’s.

The Dairy Queen in The French Quarter also was shuttered, along with Johnny Carino’s Italian Restaurant.

Westbrook said Carino’s closed in January because it was an underperforming store for the chain. It closed its Longview restaurant in December.

Several mom-and-pop restaurants opened and closed within the year. They include Red’s Famous Fried Chicken, The Rack and Mama’s Fried Pies in Tyler.

“Mom and pops” might have great concepts but lack the discipline of restaurant chains. As a former franchisee of CiCi’s Pizza, Westbrook said he had to spend money on marketing, regular updates, reimages and remodels of the stores because it was part of his contractual agreement with the franchisor.

Independent restaurateurs have to keep their individual flavors but also have to stay updated as the chains do and provide great customer service to succeed.

“Because of the competition, it just makes you be a better operator or weed out those not as strong as the others,” he said.

Tom Mullins, president and chief executive officer of the Tyler Economic Development Council, said restaurants are one of the most volatile businesses, in terms of starting up, failing and trying to start again. He said it is very competitive, and some people think they can open a restaurant merely because they dine out or believe they are good cooks.

“When you see a restaurant close, you’ve got to peel back the layers and ask what’s really going on,” Mullins said, adding that if a restaurant can’t make it in a strong market like Tyler, it probably wouldn’t make it anywhere.

There are two things a restaurant must have to survive – good, quality food and service. Some restaurants that have closed struggled in one or both areas, he said.

Westbrook said that although there has been several restaurants closed in the past year, Tyler dines out and is still a town that wants to maintain this lifestyle. When parents become busy with their kids’ activities, they use eating out as their family time.

Chris Smith, co-owner of Chris & Sam’s Bar & Grill, said the need for duel income families has cut back on some people learning how to cook, so more people pick up something on their way home or go out for dinner. That has spurred the restaurant business, as well as the need for creativity, he said, adding that a restaurant must continue to evolve to capture the interest of the public.

“Tyler will continue to be a strong market, but you will see. … Some restaurants fall by the wayside,” Westbrook said. “There comes a point and time when each opening is going to affect somebody because it just simply splits the pie up a little bit more.”

 

PERFECT TOWN

Mullins said that about 15 years ago, national chains began picking Tyler as one of the first mid-size cities in Texas to locate. Older chains, such as Applebee’s, On The Border, Outback Steakhouse and TGI Fridays, did extremely well when they opened here and continue to do well, he added.

Now, there always are new chains trying to break into new markets, he said.

Razzoo’s is a privately held company started by Powell and a small group of investors in 1991, with the first restaurant in Richardson. Now 22 years later, he has 18 stores around the state. With Razzoo’s in Tyler is the first in the East Texas area.

Powell said they could feel the buzz before they opened Razzoo’s in December and knew he had some sort of following from residents who eat at his Dallas restaurants. But, he said, he was blown away by the business levels and how he was embraced not only by the customers but the city.

“The intensity of the interest is what was a bit of a surprise,” Powell said.

The opening of Razzoo’s exceeded their expectations. Although he usually doesn’t talk numbers, he said clearing $130,000 a week out of a medium-size restaurant is a crushing volume to start, but when those numbers are holding as they are in Tyler after a month of opening, that is huge, he said on Jan. 28.

“We knew Tyler was a perfect town for us,” he said. “It is the perfect one-store market.”

Powell said he would not open a second Razzoo’s here because he doesn’t want one eating away from the other. Getting greedy can saturate the market, he added.

That’s not to say Longview wouldn’t be a good market for another Razzoo’s. He said they don’t have plans but are interested in other East Texas towns.

“We’re in no rush,” he said. “We’d be very methodical about it (as we were in Tyler). It would be a two- to three- year evaluation.”

They started looking at coming to Tyler in 2010 and took their time to find the perfect spot, buying the former La Carreta Mexican Cafe building and renovating it, he said. Powell said they were presented with many opportunities here but had to carefully consider visibility, as well as traffic flow and parking, when picking a location.

The restaurant hasn’t incorporated its lunch menu or opened its patio. He said those will be implemented as a Phase 2 level opening in the spring.

 

LOCATION

New developments on the south side of town, such as Village at Cumberland, will continue to pull people and businesses south, Westbrook said. Shenaniganz, an entertainment venue that will be part of the 80-acre retail development, will have two restaurants and a bar. There also will be several other restaurants in the center and surrounding area, he said.

But Broadway Avenue remains very viable, and there is enough restaurant activity on Old Jacksonville Highway to make it sustainable, Westbrook said. He believes restaurants inside Loop 323 and closer to the center of town will have a harder time because retail activity is being sucked south.

“It’s still location, location, location,” he said.

Mullins said Tyler is its own draw. It does not get fallout or spillover from major markets such as Dallas because of the distance between the cities. He said Tyler has high retail growth, as well as continuing growth in population, the housing market and traffic counts. All of those factors are what restaurant chains look at when deciding to locate to an area.

Mullins said there also are several locally owned successful restaurants, such as Bernard’s, Villa Montez, Rick’s on the Square and Don Juan Mexican Restaurant.

Local restaurants planned for the city include Happy’s Fish House and Wok Box.

Some of the chains headed to Tyler are Freebirds World Burrito, a second Popeye’s Louisiana Kitchen and additional Taco Bells, as well as possibly a Steak ‘n Shake, Wild Wing Cafe and Russo’s New York Pizzeria.

Westbrook said several chains opening in Tyler are building big box restaurants. A big box chain, such as Chuy’s, can seat up to 350 people while the original chains that have been here for awhile, such as Applebee’s and Chili’s, are much smaller.

Powell said the employee base in Tyler is fantastic.

“It’s a wonderful place,” he said. “Staffing in Tyler is such a positive.”

Razzoo’s has about 120 full-time and part-time workers.

He said they are excited and proud to be in Tyler.

“The whole experience has been great,” he said. “We appreciate the warm welcome.”