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QSR Feature
The Lone Star

“All our eggs are not just in one economic basket,” DeSilva says. As a result, the adverse effects on individual industries are less likely to have a catastrophic impact on the state’s economy as a whole.

Money to Burn

With the Texas economy staying afloat, Texans are in better shape to spend money, including eating out at restaurants. While the state’s regional consumer confidence index, which gauges economic optimism through consumers’ saving and spending habits, fell by nearly half, to 64.1, in the past year, it’s still far above the national index, at 37.7, for January 2009, according to the state comptroller’s office.

Texans, it seems, have money to burn. In 2006, Texas was second only to California in its number of households with discretionary income, according to the Conference Board, a nonprofit organization that conducts business-management research. In 2009, the NRA predicts it will lead all states with a 2 percent rise in real disposable personal income. Moreover, the state has a fairly low cost of living, with four Texas cities—Palestine-Anderson County, Harlingen, Lubbock, and Brownsville—ranked among the list of least-expensive urban areas in the country during the first quarter of 2008, according to the Council for Community and Economic Research. Texas residents also pay no personal income tax.

All those factors can increase cash in hand, which in turn, Riehle says, increases the likelihood that they will spend at restaurants. A study released by restaurant reviewer Zagat in 2007 shows that Houston residents, who eat 4.2 meals per week away from home, were found to dine out more than residents in other major markets. Residents of the Metroplex (the Dallas/Fort Worth/Arlington metropolitan area), San Antonio, Austin, and Texas Hill Country also ate out more than the national average of 3.3 meals per week. Customers in the Dallas market also spent more money per capita in restaurants than those other cities in 2006, according to the NRA.

“Basically, individuals and households in Texas are more likely than average to spend at restaurants compared to the national population,” Riehle says. More on Page 3.

Know Before You Go

Thinking about entering the Texas market? Richie Jackson, executive vice president and CEO of the Texas Restaurant Association, shares some insights about the industry in his state.

“I think Texas is a great state for quick-service. People in Texas are on the go, and quick-service fits the lifestyle of a busy person.”

“We’ve got an ethnically diverse population, with clearly a strong south-of-the-border influence in our large and growing Hispanic population. The challenge is coming back to meet that demographic with regional preferences.”

“On the quick-service restaurant side, penetration in the marketplace is essential. In major metropolitan markets like Houston, Dallas, San Antonio, and Austin, that means spotting a lot of locations. You’re not going to be able to put one or two units in Houston and expect to be top-of-mind when it comes to awareness.”

“When you drive through rural Texas, there is no shortage of [quick-service] outlets in those markets. That market may be more tapped out than the urban areas.”

“One of the challenges we face going forward is going to be sustaining a workforce.”

“It really is a good time to look at Texas. Now is the time to come in, figure out where locations are, and get established. The opportunities you find today might not be here tomorrow.”

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