Golden Corral Beats Red Lobster in Highest-Grossing Restaurant List

by Jamie Walden  on Monday, Feb. 2, 2009 12:00 am  

Montine McNulty says that controlling costs is important to consumers.

(UPDATE: Following this story's publication date, December 2008 figures were released, giving Red Lobster the edge in retaining its crown as North Little Rock's top-grossing restaurant. More on this development, plus other updates, can be found here.)

(Read the list of the top-grossing restaurants in central Arkansas by clicking here for the Little Rock list and here for North Little Rock's. Click here to see the top restaurants by other cities and by category.)

(Spreadsheet versions of the Little Rock and North Little Rock lists are also available.)

Among the regular year-over-year changes in the Little Rock and North Little Rock restaurant scenes, one major event occurred in 2008: The Red Lobster on McCain Boulevard was dethroned.

The North Little Rock store, the white whale of the restaurant industry, had never been caught in more than 15 years. And only a few times did the Little Rock Red Lobster concede to a Chili's or Outback Steakhouse.

In North Little Rock – in both cities, actually – this year's victor by a narrow margin is Golden Corral, the all-you-can-eat buffet at 5001 Warden Road, which paid the city's restaurant tax on $5.3 million in revenue during the 12-month period that ended in November.

December tax data was not yet available for North Little Rock restaurants. Little Rock restaurants pay tax on 2 percent of revenue from prepared food, excluding alcohol. North Little Rock restaurants pay 3 percent.

Golden Corral, a franchise owned by Sam Fiori's Golden Partners Inc. of Fort Smith, enjoyed a 10 percent increase in business last year compared with 2007, while Red Lobster's revenue increased only 1 percent to $5.2 million.

"I'm sure that [being an all-you-can-eat buffet] helps because people are looking for value with their dollars," said Montine McNulty, executive director of the Arkansas Hospitality Association. The new rankings, she said, also reflect the competitiveness of the restaurant industry and how quickly things can change in a teetering economy.

James Staats, general manager of Golden Corral, concurred.

"I think [the buffet has] been a big part of the success," Staats said. "People, with their spending dollars, are spending wiser. They're going to where they can get more for their dollar bill.

"When all this doom and gloom started, I'm thinking, gosh, we're going to have to pare down. And we did."

Staats said he cut budgets and personnel hours. But, to his surprise, business began to boom.

"Then the next thing you know we're having to give [employees] their hours back. It's a good problem to have."

Roger Schmidt, district manager of Golden Partners, credited the management team, unchanged for about 12 years.

Staats said the location diversified into catering several years ago, a venture that has since developed into a self-sufficient business unit that accounted for about 10 percent of the location's revenue in 2008.

Big Deals in Little Rock

Meanwhile, in the capital city, the Little Rock National Airport's restaurant Host International swooped into the top spot. Host's revenue grew 10 percent from 2007 to nearly $4.6 million, while the revenue of Little Rock's Red Lobster declined nearly 12 percent to $3.9 million.

Nipping at the heels of the ebbing Red Lobster at 8407 W. Markham St. is the young Chick-fil-A at 6201 W. Markham. During the restaurant's first full calendar year of business, Chick-fil-A grossed nearly $3.7 million, catapulting it to third place on the Little Rock list.

The McDonald's on West Markham leapfrogged over seven restaurants to claim fourth place on the Little Rock list. The fast food industry's golden boy grew revenue by 12.4 percent.

In fact, all of the McDonald's locations in Little Rock experienced revenue growth that was at or near double digits.

"McDonald's, nationwide, is up significantly in this economy, and I think that those stores are just following the trend," McNulty said. "McDonald's is certainly benefiting from the down economy."

Revenue for the McDonald's on Broadway in downtown Little Rock surged 14 percent, the highest of all locations.

"It may be that the business community, where they might not normally in a robust economy be patronizing McDonald's, you may see more business people driving through or going there for lunch," McNulty said.

Cuts and Losses

Four former placeholders on the Little Rock list didn't make the cut this year. The Capitol Café at Arkansas Children's Hospital, Applebee's Neighborhood Grill & Bar, Sonic and Sam's Club Café all dropped from the top 30.

Their successors? Chick-fil-A, Famous Dave's Bar-B-Que, Cracker Barrel Old Country Store and Franke's Cafeteria.

Only one restaurant fell from the list of the 30 highest-grossing restaurants in North Little Rock. Fire Mountain on East McCain filed for bankruptcy early last year and closed in May 2008.

Whole Hog Café on Warden Road, after its first full calendar year in business, claimed the vacated spot on the North Little Rock list.

The Dixie Café was the only restaurant on the North Little Rock list to experience a revenue decline of at least 10 percent. However, several of Little Rock's most popular restaurants were down by double digits. Red Lobster, Chili's, Romano's Macaroni Grill, Jason's Deli and Cajun's Wharf all experienced declines roughly between 10 percent and 15 percent. Outback Steakhouse and Mimi's Café flirted with revenue attrition of nearly 20 percent.

Market Performance

The Little Rock Advertising & Promotion Commission collected tax on a total of about $365.9 million in receipts from 549 restaurants for the 12 months ended November 2008, up 3.1 percent from the 12 months that ended in November 2007.

For the same periods, North Little Rock – with 227 restaurants – collected tax on total food receipts of $158.8 million, up 0.4 percent from 2007. 

The total combined revenue of the 30 highest-grossing restaurants in Little Rock climbed to $86.3 million, a 13.3 percent increase from 2007. Total combined revenue for the top 30 North Little Rock eateries rose 3.6 percent in 2008 to about $76.8 million.

Of the 30 on the Little Rock list, 16 restaurants enjoyed increased sales from 2007 to 2008 while 14 restaurants saw declining revenue.

Of the 30 spots on the North Little Rock list, 21 restaurants grew while only nine experienced lagging sales.

Different Styles

A closer look at the rising and declining restaurants shows how different types of restaurants are faring.

Of the restaurants on the list that are full-service, which includes table service, 12 saw declining revenue in 2008 while only four full-service restaurants felt an upswing.

The opposite is true in North Little Rock.

Of the full-service restaurants on the North Little Rock list, 12 stores experienced revenue growth in 2008 while four declined.

Fast food restaurants on the list and their higher-quality counterparts, the "fast casual" restaurants, which don't include table service, told a different story.

Of the fast food and fast casual restaurants in Little Rock, sales at 11 stores grew in 2008 while sales at the other three declined.

For the same year, nine of the fast food and fast casual restaurants on the North Little Rock list grew, while five stores watched revenue fall.

"It could be that people that were coming to Little Rock are staying home and eating in North Little Rock," McNulty of the AHA said.

Overall, much of consumer behavior during 2008 centered on cost control, McNulty said. Whether it's seen in McDonald's capital performance, a fledgling Chick-fil-A's sprint to the third-highest grossing restaurant in Little Rock or the resurgence of Franke's Cafeteria, consumers are spending more frugally.

With those restaurants, consumers "can control their costs," McNulty said. "And I think, again, in this kind of an economy that's probably a very attractive choice for customers."

Of the 13 "upscale" restaurants in Little Rock and North Little Rock that Arkansas Business tracked, only one that had been open for two full years – Ferneau in Little Rock – showed an increase in revenue. (See table.)

Copper Grill & Grocery in downtown Little Rock opened in July 2007, so it was open twice as many months in 2008 but reported only 62 percent more revenue.

Two of the upscale restaurants have closed since the end of 2008: Aydelotte's in North Little Rock, which has converted to a U.S. Pizza Co., and Gypsy's Bar & Grill in Little Rock.

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