(Editor’s Note: The Times this week launches a new series exploring today’s economic conditions and how local governments, businesses and homeowners are adapting in these difficult times. We start with the restaurant industry.)

Millions of people plot a career road map of occupations that they dream of testing during their lifetime.

Carol Gregory has crossed one career path off her “to do list” -- owning and operating a restaurant.

Less than a year after she and husband Stephen took over Mama’s Italian Kitchen/Mexican Cantina on Parkview Drive, the business has closed.

Gregory, in part, blames the economy.

“I’m not sorry that we did it,” said Gregory. “I wished we could have looked in our crystal ball. The downturn in the economy was not something we could control.”

Fountain Hills has experienced many restaurant openings and closings over the decades, but it would seem that a disproportionate share of them have closed here in the past 12 months.

The restaurant failure rate tells a grim tale. About one in four restaurants close or change ownerships within their first year of business. Over three years, that number rises to three in five, according to research published by the Cornell Hotel and Restaurant Administration Quarterly.

Restaurants are an important factor in the local economy because of jobs and sales tax revenues.

Out of 300 active businesses, 51 are restaurants ranging from coffee shops to fast-food national franchises to upscale fine dining that operate in Fountain Hills, said Lori Gary, deputy economic administrator for the town.

Twenty-seven restaurants are located in downtown Town Center boundaries; 24 are scattered through other business corridors.

Restaurant sales tax revenue to the town has remained fairly consistent, according to town figures. Activity for the last two fiscal years, 2006-2007 and 2007-08, totaled $537,596 and $552, 226, respectively.

For the first nine months of this fiscal year, revenues from restaurant receipts came in at $360,352. April, May and June revenues are to come.

The town’s portion on restaurant sale tax is 2.6 percent.

Not surprisingly, the summer months of July and August bring slightly less revenue. In the last three fiscal years, July and August monthly receipts fell in the range of $38,158 to $40,655. The “in-season winter months” of February and March brought slightly higher activity with March 2008 recording the highest revenue of $61,097.

Every $1 spent in Arizona’s restaurants generates an additional 99 cents in sales for the state’s economy, reports The National Restaurant Association.

Although Mama’s was Gregory’s first venture into the restaurant business, she had operated a bed and breakfast inn in Coeur d’Alene, Idaho, for 19 years and coordinated the Taste of Coeur d’Alene festival. She also operated a home-base business of gift tea baskets.

“As the recession got deeper, it became more frustrating to keep things going right,” said Gregory. Financial institutions provided no assistance by extending loans.

Gregory reacted by lowering prices in hopes that step would bring in customers.

“We didn’t cut portions. That wasn’t my game plan. We gave people their money’s worth, and nothing changed about the quality of the food. In fact, I think we got better.”

Gregory said she will miss her valued customers and “trying to make things right for them.”

When the restaurant folded, the staff of seven employees and Gregory were left unemployed. She is hunting for a full-time job, not a career.

“I’m open to anything that comes my way. I’m willing to learn new things. I’m ready to work,” said Gregory.

“The economy makes it harder. Unless you are well established or have a lot of operating capital, it’s a rough go for someone. If you have that behind you, it can be very good,” she said in assessing the current local restaurant climate.

Analyze habits

“People are still getting married. People are still graduating. People are still celebrating main events in their lives and can benefit from catering.”

That’s the philosophy that drives caterer and personal chef Alan Ehrlich, owner of A Sage Idea.

The National Restaurant Association shares a similar optimistic view that Americans will continue to rely on restaurants as a key part of their lifestyle as the industry provides the food, value and service customers seek.

On a typical day in the United States, more than 130 million individuals will be foodservice patrons, while nearly half of consumers’ food budget will be spent in restaurants.

“The restaurant industry is both innovative and resilient,” said Dawn Sweeney, president and CEO of the restaurant trade association.

“In the year ahead, the industry’s sales are projected to continue to increase, with a total economic impact that exceeds $1.5 trillion, yet at the same time, the industry is experiencing unprecedented challenges due to the economic recession and elevated food prices.”

Association research shows that Americans look to restaurants that deliver value, convenience and healthier options. Fast food franchises have narrowed in on lowering prices and packaging a sandwich, drink and side for one value price.

Ehrlich of A Sage Idea closed his small café that served lunch a couple days a week on Saguaro Boulevard to concentrate on catering, teaching and preparing weekly meals for personal clients. With the approaching summer slowdown, coupled with the down economy, Ehrlich said he could not afford to keep his staff.

The economy has forced him to be creative in meeting customers’ budgets, he said.

He prepares meals in his industrial kitchen at the Saguaro location. He emails weekly reminders of seasonal specials and 10 percent discounts off a booking if email is mentioned.

As an example, he prepared green chili pork tamale pie, beef brisket chile relleno pot pies and margarita-grilled chicken breast for the week of Cinco de Mayo.

Other local restaurants offer 10 percent discounts, early bird specials or coupons for “buy one-get half off the second entrée”  in newspaper advertisements to encourage customers to dine with them.

La Tartine Bakery celebrates its first year in operation at the end of May. The café-bakery serves breakfast and lunch with a menu of sandwiches, soup, salads, quiches, pastries and coffee.

Catherine and Yves Crivello began baking bread and French pastries, and have tailored some baked goods to their American customers’ palates, such as their popular chocolate chip cookies.

Manage expenses

Restaurateurs must find creative ways to cut costs while also competing for customers who are more discerning about where and how often they dine out.

Last summer The Steakhouse at Desert Canyon offered a 4-course menu for $30 along with the regular fare. General manager Karl G. Boettcher said he learned a lesson. Most diners were ordering the special and ignoring other choices available on the menu.

This summer, only a special menu will be available to eliminate waste in the kitchen and reduce the overhead, explained Boettcher.

“We try to cut our costs wherever we can. It’s natural to do. Who wants to waste money?” asked Boettcher.

In the five years that the Steakhouse at Desert Canyon has been open, Boettcher has learned that the “‘season-ability’ of the business” requires re-adjusting operations.

“We’ll reduce the size of the portions and lower prices to make it more attractive for the locals who stay in town,” said Boettcher.

“The steak will be the same high quality fare, only instead of a 16-ounce steak, we may offer 12 ounces or so.”

Revenues are down 15 percent from a year ago, a definite direct result of the economy, said Boettcher. He has been monitoring expenses and revenue since October, promoting breakfast and lunch to offset a decrease in dinner revenues.

“We’re carefully looking at our evening numbers,” said Boettcher. If traffic in the restaurant is light, and no reservations have been made, the restaurant may close early and the staff sent home.

Review: 
Economic series, Part Two: Sanitary District
Economic series, Part Three: School District
Economic series, Part Four: Construction industry
Economic series, Part Five: Town surviving
Economic series, Part Six: Laid off teachers
Economic series, Part Seven: Stimulus money
Economic series, Part Eight: Food Bank
Economic series, Part Nine: Retailers
Economic series, Part Ten: Mayor impacted
Economic series, Part Eleven: Real Estate