Economic ups and downs are magnified in restaurants

The Economy

January 08, 1996|By JAY HANCOCK

THE RESTAURANT genus isn't the lowest taxonomic group in the business kingdom. That spot belongs to part-time home businesses and lemonade stands, the paramecia and amoebas of commerce.

IBM and Chrysler are the primates.

But restaurants are well down in the food chain, organizationally simple, requiring little capital. And they behave like it, breeding and dying in droves, proliferating and dwindling like damselflies in autumn.

More than 60 percent of all restaurants fail within five years, according to researchers at Cornell and Michigan State.

Nearly 30 percent fail after the first year.

Restaurants don't run in a vacuum, however. They interact with other economic agents, collecting money from customers, ordering from wholesalers, employing dishwashers and writing checks to landlords.

Biologists sometimes focus on one lower-level species or family -- frogs, say -- to learn about a whole ecosystem.

The restaurants of Baltimore tell us something about what happened to the city's economy in the past five years. And they may be delivering a mildly hopeful message about where it's going next.

In February 1989, restaurants and bars employed 24,851 people in Baltimore, according to Labor Department statistics supplied by the Regional Economic Studies Center at the University of Baltimore.

It was the end of a heady, prosperous decade. Downtown had revived. Yuppies were flinging money around. Two-income households had less time to cook. Restaurants multiplied from Fells Point to Govans.

Then the souffle sank.

Hurt by a slowdown in defense spending and national sluggishness, Maryland's economy plunged into recession in 1990. So did Baltimore's. So did the restaurant business.

The city lost a third of its restaurant and bar jobs, 8,653 in all, between 1990 and late 1994. Most hurt were burger and chicken and beer joints, sandwich shops, low-priced places.

People made bologna sandwiches at home instead of getting a shrimp basket at the diner.

More expensive establishments folded, too. Ones that didn't had to lower their prices.

That was then. Six weeks ago Peter Zimmer opened Joy America Cafe on Key Highway, placing his reputation and wallet at risk.

The restaurant, in the new American Visionary Art Museum, has faux industrial decor, big windows on the harbor, 70 indoor seats, mesquite-grilled ginger-molasses chicken breast and chicken-Bing-cherry dim sum.

Mr. Zimmer, 31, a self-taught chef who owned his first restaurant at 19, is well aware of the industry mortality rate -- "an awful statistic," he said.

But he is optimistic. Not only has he hired 60 people; he intends to teach many of them cooking and management while serving the tourists and art fans.

"I'm committed to train individuals and bring them to a level where they eventually will get paid what they deserve" instead of being "a commodity," he said.

Nearly 1,000 other restaurant and bar jobs were added to Baltimore's economy between November 1994 and last July. That's a 5.7 percent increase. The city had 17,121 restaurant and bar jobs as of July, the latest figure available.

"The classified section of The Sun with regard to our arena of employment has significantly grown," said Lenny Kaplan, owner of the Polo Grill and a longtime industry observer. "There are significantly more want ads for personnel in the hotel and restaurant business than there were three or four years ago."

He credits the better economy and the end of the baseball strike.

Most of the new jobs don't offer the career training of Joy $H America. Many are part time and pay minimum wage. Many won't be there a year from now.

But like bluebirds returning to the Appalachians, they may indicate a basic environmental improvement, or at least a pause in deterioration.

Parrot Island, a tropical, open-air restaurant in Fells Point, opened last summer with more than 100 seasonal workers. "Business was very good," exulted executive chef Bill Lay. "It was a rather incredible four months."

Baltimore lost more than 60,000 jobs of all types between the late 1980s and last year. Final figures for 1995 aren't in yet, but economists say that overall city employment has shown signs of stabilizing.

Think about that the next time the waiter brings a pastrami and Swiss. And give him a good tip.

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