Tax hike taking a bite

Spending at food and drinking establishments fell nationally in January and again in February, according to preliminary figures from the U.S. Census Bureau. Industry experts pin the decline on a payroll-tax hike and high gas prices but expect the tide to turn. Pictured is the recent weekday lunch crowd at Mario’s Pizzeria in Albuquerque. (Dean Hanson/Journal)

When it comes to eating out, Megan Minich has become something of a deal hound.

She looks for coupons, considers cheaper entrées and when deciding between multiple restaurants, she and husband Cord Pflug often make price the deciding factor.

And that’s if they go out at all.

Since the start of the year – when payroll taxes increased for workers across the country – Minich and Pflug say they’re trying to spend less at restaurants and stay at home more often than not.

“We’re probably eating close to two-thirds of our meals at home,” Minich said.

And this is a couple that used to eat out constantly.

“Like all the time,” said Minich, a travel nurse currently on assignment in Albuquerque. “Quite literally every meal.”

Several factors weighed into the couple’s change, including a desire to have more control over ingredients and new work hours that put them on a more synchronized schedule.

But the couple say the consideration was also financial, and Minich and Pflug aren’t the only ones cutting back.

Preliminary U.S. Census Bureau figures indicate restaurant and drinking place sales fell nationally by $290 million from December to January, a dip of .6 percent. Advance estimates show another $302 million drop in February.

Bruce Grindy, chief economist for the National Restaurant Association, noted that early data show January and February sales are 4.8 percent higher than last year, “so the overall trend is still moving in a positive direction.”

“However, the noticeable dropoff in January and February from December’s seasonally adjusted sales level suggests that there was certainly an impact from the payroll-tax hike and higher gas prices this year,” Grindy said in an email. “I don’t expect the effects to be lasting, though, and other positive economic factors will outweigh the smaller paychecks.”

‘It’s like a treat’

American workers’ paychecks took a hit to start the year when a two-year-old Social Security payroll-tax cut expired. Someone earning $30,000 a year is now paying $50 more each month in payroll taxes. Gas prices also climbed through January and February.

Bernalillo County employee Nichole Martinez said a smaller paycheck means fewer restaurant meals.

“Because I am making less money, I do a lot of cooking at home and usually I bring my lunch,” said Martinez, as she ate lunch with her sister at a Civic Plaza picnic table.

Martinez – munching on a grocery-bought vegetable hummus wrap – said she and her fiancée previously ate three restaurant dinners a week. Now it’s usually one. And she’s only buying her lunch about once every two weeks.

“It’s like a treat,” she said.

For others, though, it remains a way of life.

Mike Wilson, risk management director for Albuquerque Public Schools, said nothing has changed about his dining habits. Sitting inside Mario’s Pizzeria recently, Wilson said he eats dinner out three or four times a week and buys his lunch about three days a week.

“You have to eat,” he said, noting the convenience is a major factor. “I’m very busy. My wife is very busy.”

So far, so good for many

The National Restaurant Association projects that industry sales will actually grow by 3.8 percent this year and surpass $660 billion.

Several Albuquerque restaurateurs say business has actually been pretty good in 2013.

“I’d love to give you bad news, but I can’t,” said Nick Kapnison, who owns Kap’s coffee shop and co-owns Nick & Jimmy’s and El Patron.

He estimated that sales at each were up approximately 10 percent to 12 percent over the same period last year, though expenses have also risen due to Albuquerque’s new minimum wage and the restaurants will have to eventually raise prices.

Eddy Burgarello of Mario’s Pizzeria said some regulars are not quite as regular lately and that lunches have been a little slow at the four family-owned restaurants. But his brother, Joe Burgarello, said there hasn’t been a significant dent in sales. The local chain is “holding steady,” something he attributes to a fan base built over the restaurant’s 40-year existence.

“We’re just blessed to have the loyalty of the customers,” Joe Burgarello said.

The first few months of the year are usually good at Annapurna’s World Vegetarian Café as consumers follow diet-related New Year’s resolutions. This year has been no exception, although owner Yashoda Naidoo said sales are actually up a little from 2012. She said she’s feeling optimistic.

The local Applebee’s restaurants haven’t fared as well. Tracy Ortiz, area director for Albuquerque, said overall sales among the city’s seven locations were down in January and February. She blamed smaller paychecks and the longer wait for income-tax refunds.

“It’s been a rough start, that’s for sure,” she said. “March has been a good month, but I think that’s because people are starting to get their tax returns back.”

Change forever?

Eating out is part of the culture in America, said Carol Wight. The New Mexico Restaurant Association CEO said restaurants’ share of the food dollar was 25 percent in 1955 but 48 percent in 2012 and she doesn’t expect any major decline.

“I think people are in the habit of eating out, and they just choose which kind of restaurant to go to,” she said.

But if they do cut back now, will they return to their old ways?

Albuquerque’s Kathryn Bernhard-Brizzee, who works in medical billing, said food was the first place she and her husband sought savings when his work hours declined last fall. That meant being smarter with groceries and eating out just two or three times per month – about half of their norm.

Her husband, a commercial electrician, has seen his workload rebound recently, but the couple has yet to return to its old restaurant habits. Bernhard-Brizzee said they may eventually start going out more, “but probably (won’t) go back to the same amount.”

They’ve adapted to eating at home.

“It’s just a matter of me being more a grown-up,” she said. “(Like) ‘Oh, yeah I really should cook.’ It’s not hard.”