PUBLISHED: 1:47 PM on Wednesday, April 30, 2008
Seasonal market, food costs hit restaurants hard
Most people love to eat and restaurants love to serve, though there may be something more behind that plate of fresh salmon or tasty halibut burger that customers don't realize.

"The restaurant business is the number one failing business in America," said Dale Fox of Alaska Charr and the State Restaurant Association. "You need the right combination of service, food and location."

photo courtesy of Twisted Fish Company
  Executive Chef Charles Ramsey, left, of Ray's Boathouse in Seattle and Executive Chef Ron Burns, of the Twisted Fish Company, prepare Alaska wild salmon.
Over the years Juneau has dished up dozens of restaurants, some of which have been around for several decades and others that lasted mere months. But can Juneau be deemed an unstable place for restaurants to succeed? Restaurant owner Bill Adair doesn't think that is always the case.

"It's a cyclical thing," said Adair, owner of the longest standing restaurant in town, Bullwinkles Pizza. "Some years there's no movement at all and then one year there will be a lot of shuffling around. I don't think its unstable at all, it's just that there are some unprofessional and unprepared people that get into the business that wont last.

"People tend to go into the restaurant business with the attitude of 'its simple, I can cook, my wife can cook, we can start a restaurant,' but it's a little more complicated than that."

Adair has owned 27 different restaurants over the years in places such as Fairbanks, Anchorage, Hawaii, California and Oklahoma. Now he only owns Bullwinkles' two Juneau locations. This September will be the 35th anniversary of the restaurant.

In the past, Juneau has seen two Taco Bells, a Wendy's, Burger King and a KFC - all of which didn't last.

"Juneau people aren't attracted to that corporate image, it's a very unique market," Adair said. "There also has been an influx of way too many oriental restaurants in the last 18 months, so some will naturally go down. There are only so many people in this town to support a variety of tastes."

Naomi Judd photo
  A Bullwinkles Pizza employee serves up a few slices. The pizzeria is one of Juneau's longest standing restaurants and will celebrate its 35th anniversary in September.
Eric Forst, new owner of the Red Dog, also said that chain restaurants have problems staying afloat in Juneau.

"It's very hard to manage a restaurant from another town; you have to be there in the same community," he said. "My wife and I used to own Subway, and saw that was the case. The new owners are here in town and are doing great with it."

Heads might be turned any time news hits that a certain restaurant is closing or changing ownership, but much of the time it may only be for renovations - or in The Red Dog's case -simply time for the previous owners to move on.

"The previous owner had it for 40 years and was just ready to retire and move some place sunny," Forst said. "My wife and I had known them and talked about buying it for several years. We are very excited about making the purchase. The Red Dog is a long-time Juneau icon. We're proud to be the new owners."

Juneau gains much of its support from the summer months when tourists flock to feed at local spots off the ship. Places like the Red Dog are no exception, though according to Forst, it is just as important to cater to the locals.

"The restaurant industry, especially downtown, is highly dependent on the tourism industry and Juneau would not have the variety of restaurants it does if it were not for the tourism. But the Red Dog is more than just a tourism bar... its for the locals too even in the summer," he said. "I love to see the locals in there."

Trying to balance the differing tastes of the locals and the summer tourists can create difficulty, however.

Still, restaurants in Alaska are an engine of economic growth, generating tremendous sales and tax revenues for the state, according to the National Restaurant Association.

Every $1 spent in restaurants in Alaska generates an additional $0.74 in sales for other industries in the state, according to NRA statistics. Each additional $1 million spent in eating-and-drinking places in Alaska generates an additional 32.9 jobs in the state and the expected job-growth is only expected to increase, generating 6,000 new jobs by 2017. The restaurant business, despite its fluctuations, is the nations second largest employer outside of government.

Trying to balance the differing tastes of the locals and the summer tourists creates a difficulty for many, and the fluctuation of tourism months means some restaurants' clientele dips in the winter.

"A lot of the restaurants that are in town have been here a long time. I would say if something makes it past the three year mark they are going to stick around and do well," Forst said. "The winters are always harder, and the summers are always very busy, a lot of owners make a ton in the summer so they can live off of that in the winter. But after a long busy summer, some people just get tired. So the turnover rate might be a little higher in Juneau because of various things, but I don't think the failure rate is that high. Sometimes people might try something a little too high end for a small town."

The components of owning a business might seem complicated at a glance, but Fox spells out what restaurants need in order to make a profit.

"Typically, the funds go to 30 percent labor, 30 percent food cost, and 30 percent overhead, so if you run everything properly you might make 10 percent," he said. "The thing is, there are a whole bunch of things that can take away from that 10 percent, if some of the food goes bad or if customers aren't the right crowd, etc."

Many Restaurant owners are feeling the crunch of these components lately. The price of corn is rising, creating a domino effect on the cost of food, transportation and labor. Corn syrup is one of the most heavily used additives in food products.

"The most important item in the American food chain is corn," Adair said. "It is used as a sweetener. Rice is used as the base of everything in the Orient - corn is our rice in America. We feed chickens, cattle, and hogs all this corn and the rest of us are paying."

Retail food prices as a whole increase an average of three percent per year according to the Bureau of Labor Statistics. When people get wide-eyed at price tags in supermarkets or on a menu, it is in part because of the shortage of corn. The price of corn currently hovers around $6 per bushel, surpassing the record $5.545 set in July 1996. According to the National Agricultural Statistics Service, 20 percent of corn harvested in 2007, about two billion bushels, was used to produce ethanol.

But even with increased corn prices and costs to ship products and produce to Alaska, Adair said the bottom line will always be proper management.

"It's the management that leads to success but we also need a good economy," Adair said. "If not, there's no money to be spent."