Spokanes restaurant industry has been growing robustly in recent years, thanks largely to a healthy economy, a vibrant downtown, and diners newfound appetites for niche cuisines, restaurateurs here say.


In one indicator, taxable retail sales of full-service restaurants here have been growing briskly, and so have the number of restaurants in business here, tax records show.


Industry representatives say that while they expect the growth to continue, trends such as increasing competition, food price inflation, and consumers changing dietary needs are heaping plenty of challenges on their plates.


People are eating out more than ever and spending more money, says Larry Brown, longtime restaurateur and part owner of Landmark Restaurants Inc., which operates The Onion and Franks Diner here. Were getting tremendous employment growth in Spokane, and that has helped enormously.


Andy Swanee Swanson, owner of the Metro Caf downtown and president of the Spokane chapter of the Washington Restaurant Association (WRA), attributes the growth partly to new players here that have focused on specialized segments of the industry, such as ethnic foods or the lunch rush for the business sector. A revitalized downtown core also has contributed to the industrys growth, as have the efforts of organizations such as the WRA, Spokane Regional Convention and Visitors Bureau, and the Downtown Spokane Partnership, all of which have encouraged cooperation among restaurant owners here, he says.


Swanson says members didnt announce any closures at the most recent WRA chapter meeting, which is another indication of the industrys health.


Taxable retail sales for full-service restaurants in Spokane County rose to roughly $240 million last year, up from $213.5 million in 2005 for a gain of 12.9 percent, according to the Washington state Department of Revenue. Sales were $199.8 million in 2004.


The number of restaurants grew in the 2006 calendar year to 346, up from 315 in 2005, according to sales-tax records. In the most recent available figures, sales for the first quarter of this year reached roughly $61 million, up from $56.8 million in the year-earlier period, and the number of restaurants grew to 315 in the first quarter, up from 287 last year.


Since the number of new restaurants has been keeping pace with sales growth, the pie is getting bigger, but competition is slicing pieces smaller, restaurateurs here say.


Theres been a tremendous amount of new seats built in the downtown area, Brown says. Its really pretty highly competitive downtown.


Landmark Restaurants sales have been healthy, but the company has had to work harder to bring customers into The Onion restaurant downtown than it used to, as new players are steadily chipping away at the old stalwarts, Brown says. As long as another new flood of competition doesnt hit downtown, though, sales at both new and established restaurants should stay strong, fueled by the increase of housing in the citys core, he says.


Among the restaurants that have opened downtown in the last few years are Moxies, Bluefish, Raw Sushi & Island Grill, Wild Sage Bistro, P.F. Changs China Bistro, Isabellas Restaurant & Gin Joint, and Madeleines Caf & Patisserie.


Noel Macapagal, a partner in Northwest Inlanders Hospitality Group LLC, which operates Bluefish, Raw, and the Ridpath Hotels Artisan Room, says that local entrepreneurs who have introduced niche cuisines to the Spokane dining scene have found that consumers are hungry for something other than basic American food. Such destination eateries, as well as increased nightlife activity downtown, have helped bring diners downtown and kept them spending money into the wee hours.


Its a combination of individual entrepreneurs pushing niche cuisines and a lot more people coming downtown, Macapagal says. A lot of people have taken a chance developing these destination restaurants, and have educated the populace about different kinds of food.


Cooperation also has been crucial to restaurateurs success, Macapagal says. Food suppliers in this region have been more willing to procure specialty products for restaurants than they were in the past.


Restaurateurs also have cooperated with each other and maintained cordial relationships.


We know each other and respect each other, and are trying to make sure its sustainable growth rather than exponential growth at the cost of our colleagues, he says. As long as we keep putting out good products and good service, the growth will sustain itself.


Dining activity in the periphery of the city has been booming as well, particularly on the South Hill, where restaurants such as Twigs Bistro & Martini Bar, Vin Rouge, Hangar 57, and Okane on the Hill have opened in the past few years. The owners of the Elk Public House, in Brownes Addition, say they hope to open a restaurant in the Lincoln Heights Shopping Center by the end of this year.


Meanwhile, in North Spokane, Twigs expects to open a restaurant in the Wandermere area this December, and plans to convert its current North Side Twigs restaurant to a wine bar early next year.


Swanson says that while a wave of new restaurants has increased competition in the Spokane area, there always are restaurateurs ready and willing to open new eateries.


I think someone will always open a new restaurant, although they may have to do it on the shoulders of someone else who failed, he says.


Fresh ideasTrevor Blackwell, director of operations for the Spokane-based Twigs chain, says the key to survival, especially in light of the recent trend toward niche cuisine, is continually coming up with new ideas for menu items, restaurant dcor, and customer service.


For instance, Twigs now offers martini classes for customers at its restaurants, and plans to offer wine classes at its wine bar. Its also looking at offering cooking classes as well.


Spokane has finally turned the corner. In the past its always been meat and potatoes, but now there are more options, and people are willing to take a chance on something different, Blackwell says. Staying ahead of the curve and bringing something new has been important for us.


Blackwell says one of the biggest challenges Twigs is facing involves finding qualified employees, particularly chefs. The ever-increasing minimum wage also poses challenges, he says. Washington states minimum-wage law, unlike such laws in many other states including Idaho, doesnt make exceptions for tips. Thus, restaurants must pay employees the full minimum-wage amount for every hour they work in addition to their tips.


Food prices also are biting bigger chunks out of the bottom line, Swanson says. As more corn growers use their crops for ethanol production instead of feeding livestock, food prices will continue to climb, he says.


My restaurant is built around turkey and beef, so food prices are giving me more worries than if a new guy is opening down the street, Swanson says.


Diet trends pose another hurdle to growth, Brown says. Obesity has become a national epidemic, causing consumers to watch what they eat more closely and limit their restaurant visits, he says. Meanwhile, as baby boomers age their dietary needs are changing as well, he says. As a result, restaurants now have to tailor their menus to diners specific tastes and needs.


People light on their feet will do well, and the people who cant figure it out will have some difficulties, Brown says.


Contact Emily Proffitt at (509) 344-1265 or via e-mail at emilyp@spokanejournal.com.