Hi, I'm Jeff Rea, your host for Economic Outlook.

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The National Restaurant Association forecast sales will top $1 trillion for the first time in history.

And the nation's second largest private sector employer is on track to add 200,000 jobs, bringing employment to 15.7 million.

We're diving deep into the state of the restaurant industry with two prominent local owners.

Coming up on economic outlook.

The restaurant industry is the second largest private sector employer.

2024 looks to be a good year for the industry as forecasts call for increased sales, more hiring and strong competition.

This week we're sitting down with a couple of local restaurant owners for a deeper dive into the industry and what you can expect locally.

Please join me in welcoming Kurt Janowsky, the owner of the Navarre Hospitality Group, which operates several restaurants across north central Indiana, and Peg Dalton, the co-owner of Peggs in downtown South Bend.

Guys, welcome.

Thanks.

Glad to have you guys back.

Thanks, Jeff.

Thanks for having us.

So interested we as we've read reports like from the National Restaurant Association, thought this would be a great topic to kind of dive deeper into the industry.

And you guys certainly you guys live it every day.

So we're glad that you came here.

Maybe just for a quick introduction.

First Peg let me come your way.

If somebody is not familiar with Pegs, give us just a high level overview of it.

Sure.

We operate in the 100 block of Michigan Street where breakfast and lunch and it's a full breakfast menu.

We do a little bit of catering, but mostly everything we do is in-house.

Been there 23 years, have the staff to prove that, have had many people with me for a long time, and that's what I believe to be the key to our success.

So I'm still in the building every day.

If I'm in town, If I'm not in town, of course I'm not.

But I think it's really important to have my feet on the ground there.

So.

Great.

And Kurt, let me come up with somebody who doesn't know one of our hospitality.

Talked to us a little bit about what of hospitality does.

We're a collection of eight bars and restaurants and six catering venues in South Bend, Elkhart, Granger and Mishawaka.

Great.

So name a couple of the brands, Cafe Navarre, kind of the flagship Artisan in Elkhart, Rocky River, Tap and Table O'Rourke's Doc Pierce's, Spirited here across the street.

So great.

No, thank you.

Well, thank you both.

Both.

I've been to many, and you have some terrific operations here.

Well, let's start maybe a little bit more personal, if you will.

Let's talk about this journey.

Peg you mentioned, like 23 years you've been at this.

You know, it seems like everybody has a little bit of a fantasy to run a restaurant.

It's a tough industry to get into.

The success rates sometimes, aren't there.

Talk a little bit about what inspired you to sort of follow a path years ago to get in the restaurant industry?

Sure.

I this was not my plan.

It fell kind of into my lap when I was at school in Bloomington and started as a waitress in a restaurant that needed a manager pretty quick, and I thought that I would just do that part time.

And 37 years later here I am.

So I experienced working for a couple of different people, and I worked the same way when I was working for someone as I work now as as owning the place.

So I always have taken great pride in what I do and I really love what I do.

I say frequently I feel very fortunate to get a paycheck for what I love doing, so it was not my plan.

I was going to school to be a teacher.

So my plan shifted and I feel blessed to have figured this out.

Not everyone gets that right, but so my guess is you still had a chance to teach a lot of people.

A lot.

And I have it every day.

Every day.

And Kurt talk about your path.

What inspired you to get the restaurant business.

Similar story.

I was working.

I started working when I was 14 in a restaurant and I've never worked anywhere else.

So originally it was going to be save money for college, and then it became all I've ever done.

So I started out washing dishes and cooked and waited tables and bartended and, you know, which is essential to be able to operate a successful restaurant.

I know Peg would share this, but you've got to be able to do every job in the in the building because you're going to have to do every job in the building at some point.

Yeah.

So Peg I'll come back your way.

So as I mentioned, this is a really competitive industry.

The success rates aren't always the best and somebody in business school might be looking at the those rates and say, I'm not sure if that's the right path for me because it's a lot of hard work and the hours and so but but talk a little bit about just sort of the the advice you might give to that person who's thinking about doing something in the restaurant space.

Well, it is risky, I would say, if people ask for that.

Did you realize what a big risk you were taking?

I didn't I didn't feel like it was that big of a risk because I felt very confident in what we were doing.

So I never felt that, which is a good thing.

Had I felt that I might not have done it, but I do believe it is.

It is risky.

It takes a lot of hard work and dedication.

I sometimes look back on the 18 years of seven days a week and, you know, with a little wish, I had maybe been home on more Saturdays.

But I quickly tell myself the restaurant is where it is today because of the hard work that I put in.

So and all three of my children still love their mother.

So it all worked out right.

So it worked out okay.

But I can kind of think that.

So to a person who's thinking about it, I don't think that you're not going to work hard because you're going to work very hard and you're going to need to be a strong leader.

My staff knows I set the bar very high.

I tell I do all of our interviewing and all of our hiring and we're smaller.

I can I can do that.

But I let them know right away, You're going to work hard here, watch, look, look around and see what everybody else is doing.

And if you don't like to work hard, this is not the place for you.

You're going to be well rewarded, but you're going to work hard.

So I, I think that that's really important.

And it's important to just be a good, strong leader.

I know.

I can't do it.

All right?

I can't do it all.

I know.

That's right.

I mean, I know exactly.

Yeah.

And it's interesting.

I grew up in retail.

My family had drug stores and such and very similar.

The hours are crazy, but that family time and the chance to serve the public is such a such a fun and important time.

Similar question.

So talk about just sort of again, your experience, your advice as you're as you're thinking about it, as people are thinking about this.

Again, I think a lot of people have this fantasy to open a restaurant, but it's not as easy as that.

I wouldn't pursue that fantasy.

Yeah, it's been really good for me.

But when I started, I was 20 years old when I bought my first restaurant.

So there isn't anything to risk because you got nothing to lose when you're 20.

So I do know and you run across people who are thinking of it as a next career.

And so they've got children and mortgages and college to pay for, and they're thinking about quitting their day job and opening a restaurant.

And I would tell all of those people not to do it it is riskier than you need to do.

And I would also say that it's important to be to come from the business, right?

If you work in a restaurant, then decide to own it.

Perfect.

Right.

If you want to go from being an employee to being an employer, I strongly support that.

But if you're not from this business, it's probably not for you.

Funny that my stepdaughter was getting ready to go to the prom and my wife said, So tell tell Janie about some of your prom stories.

And I don't have any prom stories because for the four years I was in high school, I worked prom night all four of those years.

Right?

So that's what you do when other people are playing and having fun.

You're working.

And if that's not for you, then I wouldn't get into this business.

Not so hard anymore.

You know, a little longer in the tooth.

And we've got a great team.

So I'm not in the restaurants, work in service, but.

But you will be for the first 20 years.

And so if you can't see past that, that I wouldn't it's not something I would encourage any good friend of mine to do, right.

Yep.

No, I think that's some great honest advice.

I think we always appreciate sharing that with our viewers.

Kurt let me stay with you for a second.

So so I turn this a little bit like the state of the restaurant industry.

You operate several different things across the marketplace.

Can you give us kind of a high level, you know, like like I think as a diner, for example, I got a lot of options in this area, southwest Michigan or central Indiana, almost anything I want, I can find it.

Give us just a little state of the industry, if you will.

Sure.

What the markets like, that kind of stuff.

We have a really strong and healthy restaurant market in our region and it hasn't always been that way.

It was a chain dominated for 20 years.

And now I would say that's no longer the case.

There's plenty of chains still out there.

Another one open this week, I guess, on Main Street.

But I think that when you ask most people in the area, name some restaurants you like to go to top of mind or more likely than not going to be some of the independents, especially where we are here in downtown South Bend.

It is a strong independent.

You know, there's 50 independent restaurants within a stone's throw away where we're sitting.

So it's a it's a good environment for restaurants.

I will say it's also a little bit of an overly competitive environment for restaurants, right?

There's there's an awful lot of them.

Saint Joseph County Health Department issue 1600 permits in Saint Joseph County alone.

So that's everything from 7-Eleven that serves hot dog and every grocery store.

But there's a lot of restaurants in that number but it's industry wide.

It's it's really healthy.

You opened with the number of jobs and the number of the total top line revenue in the United States will top $1 trillion for the first time in 2024.

There's about 13,000 full service restaurants in the state of Indiana.

It's it's and we're, like you said, the second largest private employer in the country.

So a lot of people work in restaurants.

You know, nine out of ten adults I read had at some point in their life worked in a restaurant.

And that interesting.

Is it honestly, do you think can you maybe touch touching even on the the customer service piece of this?

You know, like I cut my teeth both in the drugstore and in in restaurant and some of that stuff.

And and I don't want to take those employees any day.

Right.

Because because once they sort of learn some of the valuable lessons you talked about, like I got to do everything here, I think they're much better employees.

So you in many cases, sometimes are the the first piece of this training ground for our future workforce lot.

That's often true, Yeah.

Yeah, for sure.

And we I employ a lot of young people and I consider it my job as well as the senior staff to let them understand about hard work and work ethic and asking for help and all these things that skillset transfer customer service can transfer to anything.

So yeah, I think that's great.

I want to stay with you for kind of what we talked about.

So you've been in the business for a couple of years now and so you've seen this restaurant market place in the in the region change and evolve and such.

You, you were the plow, the field, if you will, downtown, one of the first folks down here.

So talk a little bit about just sort of the state of the industry from your perspective and how things have changed during your time.

Sure.

So one substantial change is we're not the only breakfast place in in our downtown anymore.

That's a that's a big change.

You know, that I, I have said that for years that we were really lucky to be the one of the only full service dining downtown.

Now, that has changed, but that hasn't impacted us negatively.

It just gives people more choices.

More people are coming downtown specifically not talking about the region, but more people are coming downtown for breakfast and there are more choices.

There's still plenty coming through my doors, so it's just fine.

In fact, it's better than ever.

I think breakfast as a daypart has grown substantially in our in our 23 years of business.

And there are many reasons to that.

I you know, we we have held our own during 2008 when the economy went in the tank.

And I had a theory about that that people are taking more clients out to breakfast and out to dinner.

Less expensive to do to do that.

And all of our offices around us were filled.

That has changed a bit since COVID.

But we still it's still just fine.

It's great, in fact.

And we you know, after COVID when we reopened, we're only operating five days a week rather than seven days a week.

And we are our sales continue to grow beyond what we were doing in seven days.

So even though we're paying people more, which Kurt and I were talking about before the interview, it's so important that we're we're contributing to people earning more and having a better life style, happy to give those raises.

And our bottom line just looks different.

And that's okay because we're providing something great for the people that work for us so that it's things have been great for us and I speak a little bit less globally, I guess.

I don't have all of it.

Yeah, that's all the numbers that Curt might have to build on this a little bit because because it's paying mentioned employees are making a lot more coster a little higher but but still predicted to be a record year for for restaurants to talk about maybe that employee piece in particular because you like every employer got to attract this talent and I got to retain him.

If I can talk about the evolution that's happened in that space now, everything happened.

Everything changed with COVID, right?

So everyone quit the restaurant business.

And I didn't blame a lot of my colleagues in the business.

And people I know are wringing their hands and banging the table and mad.

And I said, Hey, we had it coming for a long time.

People that worked in our industry were doing it temporarily.

They couldn't support a family on this.

They didn't consider it a career or the job in the way we want them to.

And that's our fault, right?

If you can't if you're making ten bucks an hour, how can we expect them to commit their life to what they're doing?

So those days are over?

I'm glad they're over.

Our employees are glad they're over.

So now it's easier.

We pay much better and we have benefits.

It's it's a very competitive landscape and we compete not against other restaurants and our heads anyway, we talk about competing against other industries, so I've got to get a welder that might be working for an RV supplier to consider being in a line cook.

And so I've got to pay him or her those kinds of wages than we are and and he won't get laid off.

So our we've never laid an employee off.

And I mean, I've been at it for 40 years and other than COVID, I have to do that caveat where we laid 100% of our employees off.

But it's been a good positive thing.

I think we didn't know whether because we've got to pass some of that additional expense on to our other consumer and we didn't know if people would pay $5 more for that entree so that we could pay the line, cook $4 more an hour.

And what we found out is they are so the fact that we're not in it alone makes it easier, Right?

Everybody had to adjust.

So restaurant employees getting a raise was a good thing.

And I'm glad it happened.

You know, I think that's great.

And having known many of your staff, you've got some really phenomenal people in your teams.

And much like we've talked a lot on this show about retaining those people and attracting and how important that is, but want to shift a little bit.

So our our show generally has a jobs economy, economic development kind of focus.

Both of you have been key catalysts to redevelopment of areas that that needed somebody like you to kind of bring folks in.

And so I spent a few minutes on that space, maybe think come your way first, because when you made the decision to move from suburban to downtown, somebody, some people really looked at you and thought, you're crazy.

What the heck are you doing down there and stuff?

But you found a way to make that work.

Talk about just that role you've played as kind of a catalyst to help to revitalize downtown, right?

I am kind of a collaborator by nature, so it was important to me to understand the landscape where and when we were going, coming downtown, get to know our neighbors, and not not just the restaurants, because there weren't many restaurants at that time.

But, you know, we'll get to know people in the offices and work that way to help build the business.

The weekends were a different story.

I'm sure I've told you this before when I was at the restaurant on a Saturday before we opened, there were zero cars on the street, and I called my then partners and said, What are we?

What are we thinking?

There's no one down here on a Saturday.

They said, it'll be okay.

It'll be okay.

And it was okay.

From the very first Saturday, I think people were looking for dining in our downtown.

And it happened.

It happened pretty quick for us.

So I'd love to, you know, say thank you.

I was a trailblazer.

It happened naturally.

I think our area was ready for that and we worked hard.

You know what we do inside our walls makes a big difference, right, as to whether or not people are coming back.

So I have to give a lot of credit to my staff and take some of that credit myself.

But people were ready for it.

Or all of these restaurants that have happened in like 20 plus years that we've been there wouldn't wouldn't be surviving or thriving.

So, yeah, Kurt let me come your way Because when I think about you and of our hospitality, I think what an important catalyst for the revitalization of the First Bank building for Cafe Navarre or in particular of more interest recently in Elkhart with Artisan and some of the other things you're doing.

And they would talk about just the maybe important role your industry plays in helping add to that quality of life for a community and help revitalize, you know, the the buzzword for a while now has been placemaking, right.

And attracting and retaining talent requires one of the first things people mention is restaurants.

When they talk about that of you, they want a vibrant restaurant scene.

If you want to move in a place, you want some culture.

But I guarantee you you're going to go to a restaurant a heck of a lot more often.

You're going to go to a baseball game or a show.

And the it's important, right?

And luckily the communities supported it.

I think economic development efforts in our region recognize the value of good restaurants.

So they're supportive and helpful when they can be.

Cafe Navarre is a risk downtown, right?

That was a large investment.

LaSalle Grill was a it was a an established excellent restaurant downtown.

Been here by themselves in that in that market for quite some time and there was there was no hesitancy on our part.

But a lot of people, as you mentioned, were looking at me and you sure you don't want to do this in Granger Mishawaka where everyone else is doing it.

And we like downtowns.

So, you know, three quarters of our businesses are downtown and we like old buildings on the other thing, it's, you know, it's nice to have some charm in the place you're dining.

So we're glad that it's been that it's worked out and we're glad to be a part of economic development in the areas we serve.

Kirk can I ask you to maybe expand a little bit on more on Elkhart in particular, just because an important part of our viewing area, we've had the maybe Elkhart leadership on a number of times to really talk about kind of the revitalization of downtown, some of the new buildings down there and stuff.

So so if people aren't familiar with sort of your the product or kind of what you're doing downtown Elkhart, we want to encourage them to go visit, remind them what's there for them to visit, what happened in Elkhart?

Right.

So started probably with the Lerner Theater revitalization, $80 million in 2011.

And that kind of was a catalyst.

And then two presently or are we just broke ground on the next phase and the River District, which is a bunch of apartments and for sale homes and retail and restaurants in the River District in front of the new aquatic center and along that area.

And, and then in between.

Artisan In 2014, 2015, we opened and Four Diamond restaurant.

There's never been one in Elkhart County now there are to a quarter of a mile way and down five in the state to in Elkhart Indiana.

So that's statistically unlikely.

So Elkhart is a great dining market right now, and that certainly hasn't always been the case.

You've always been able to get good food, but it's mostly been ma pa family, Italian places, and there's a hacienda and, you know, that kind of thing.

So we have really happy and proud to have been part of that.

I've been in business in Elkhart since 1988 at the Matterhorn.

So and going to the Wayback Machine and and that was a fine dining restaurant for a long time.

And I love working in Elkhart.

The customers are great.

Our friends, we have a lot of friends there, and they support the restaurants.

So and downtown's hoppin.

Yeah, it's really sure is and a real credit.

I think you hit the nail on the head with that quality place and how important that is to so Peg as we move.

We're getting our last 3 minutes or so.

So just talk about just maybe the continuous evolution, trying to adapt to changing diner needs or changing hours or something.

You mentioned, for example, you, you don't you're not open seven days.

You're open five days.

But but my guess is and maybe more people are breakfast, lunch.

Just give us a feel for current trends.

The things that you as a restaurant owner have got to be thinking about to sort of stay on the front edge of where things are at.

Right?

We develop new menus frequently.

We have our main menu, which everybody wants.

Everybody wants some of the same things for breakfast all the time.

So with we run specials that help diversify what we're doing a little bit.

So we try to stay on trend on that, but more than anything is the hospitality and of it.

What can we do extra?

And that becomes very natural for my staff to go above and beyond hospitality wise, whether it is singing to a groom as they leave to go get married or singing go into the chapel.

And and then he returns the next day and we're singing I Can't Help Falling in Love and these things that we do that the staff embraces, learning names, running outside to help someone, and that's coming in and a walker and some of that stuff.

You can't train.

You can continue to encourage it, which I strongly encourage it.

But that's about the hiring of the people that are going to really care about our customers.

So I think that helps to set us apart.

We seen nothing but good things coming in the years to come, so it could come your way in about a minute or so.

So you know, you're trying to you're trying to help the industry get to a trillion.

What are the things you're doing to sort of sell sell carry outs, obviously bigger.

So you've got to embrace that delivery.

More people are eating more restaurant meals, not in that restaurant than ever before.

That's continuing to grow.

So you've got to follow that and figure out how that fits in with your restaurant.

So our casual concepts that works for our fine dining concepts, not as much.

Some of that stuff doesn't translate right.

You get it in a box and it's a $37 piece of fresh fish and you're like, That's not quite what they want.

So the value proposition, but you've got to see value is really the thing.

So if we want to continue to get people to spend such a large percentage of their income in restaurants and that grows every year, we have to offer better and more value.

And values are two sided proposition, right?

It's not just how much you pay for something, it's what you get for it.

And so our focus is on more value and everything we do so that it's easier to get more people to want to want to spend those hard earned dollars there.

Great.

Well, thank you both for a tremendous success stories.

We appreciate being here today and sharing some of that with our viewers.

So, yeah, that's it for our show today.

On behalf of the entire team here at PBS Michiana WNIT thank you for watching or listening to our podcast to watch this episode again or any of our past episodes.

You can find economic outlook at wnit.org or find our podcast on most major podcast platforms we also I encourage you to like us on Facebook or follow us on Twitter.

I'm Jeff Rea.

I'll see you next time.

This WNIT local production has been made possible in part by viewers like you.

Thank you.