Despite Economic Recovery, People Still Eating at Home

In this Friday, Jan. 14, 2011 photo, Beverly and Eugene Murray have dinner at their home in Cary, N.C. As the economy improves and families have more spending money, they're still saving restaurants for special occasions. (AP Photo/Gerry Broome) (AP)

Eating at home may be one of the few behavioral changes from the recession that stick.

Forced to eat more meals at home when money was tight, people learned new habits. Some discovered they enjoy cooking and dining in. As the economy improves and families have more spending money, they're still saving restaurants for special occasions.

Restaurants traditionally have led other types of businesses out of a recession. This time, they're at least a year and a half behind retailers. Sales of clothing grew 5 percent last year and autos rose 11 percent, as Americans started feeling better about their finances. At casual sit-down restaurants like Outback Steakhouse, the increase was just 1 percent. Some analysts say that could be the new norm.

President of her own marketing agency in Raleigh, N.C., Beverly Murray, 46, never thought she'd have time to cook. But in 2008, her business tanked. Suddenly dropping $10 or $20 on every meal was not an option. So she got to know her stove. Now she subscribes to Cooking Light magazine and even has a signature dish, chipotle seared chicken.

When she does go out, she says, it's a special occasion with friends. Having lost 30 pounds as a pleasant consequence of cooking at home, she is sticking to the new routine, even as business picks up.

"People are becoming not only accustomed to eating at home, they're enjoying it," says Darren Tristano, executive vice president of restaurant consulting firm Technomic Inc. "They can sit in front of their 50-inch flat-screens and not have to tip a waiter."

Americans lead the world in restaurant spending. About 44 percent of food dollars are spent outside the home — a figure that started rising sharply in the 1970s, as more women joined the work force. Full-service restaurant revenue rose 5 to 7 percent a year in the decade leading up to the Great Recession, which halted growth. Over the next decade, visits to restaurants are forecast to increase less than 1 percent a year, according to the NPD Group. That's less than the population will grow.

Instead of handing their money over to mediocre eateries during the week, people are saving up for the occasional nice meal, says Stifel Nicolaus analyst Steve West. Meanwhile, cooking has become hip, says Rick Smilow, president of the Institute for Culinary Education, where registration for recreational courses was up 10 percent last year.

Diane Wolfe and her husband managed to kick their five-night-a-week restaurant habit two years ago when the tumbling stock market took their retirement account with it. These days their investments look better, and they're eating out once or twice a week, but cooking at home has become the norm.

"I used to clean my stove with a feather duster," says Wolfe, who lives in Manhattan. "Now I actually have to scrub it."

This behavioral rewiring is hurting restaurants from New York to San Diego.

December is usually a strong month for restaurants, thanks to holiday parties, New Year's Eve carousing and the need to grab a bite while shopping. But many proprietors, including Rafi Hasid of Brooklyn's Miriam Restaurant and Wine Bar, say it was disappointing. While retailers were reporting their strongest holiday sales since 2007, restaurants were fighting to fill booths.

"We did a lot more couponing in the latter part of the year," said Todd Ramsey, general manager of Hunter Steakhouse in San Diego's Mission Valley. "It was important to keep our name out there."

Discounting is not sustainable in an industry with 3 percent profit margins. If the costs of food and utilities rise, that could kill restaurants that are just hanging on, says Deborah Dowdell, president of the New Jersey Restaurant Association.

Maryland's Iron Bridge Wine Co. is a top-rated restaurant in the country's third-wealthiest county. But on a frigid Thursday at the end of December, co-owner Steve Wecker could be found out back, packing a catering truck. Event catering is hard work and something Iron Bridge avoided in better times. But it helped the restaurant eke out 1 percent growth in 2010. When customers do come in, they're still splitting appetizers and ordering lower-priced wines.

Some slices of the industry are faring better. Four-star restaurants like New York City's Per Se have 30-day waits again, as the rich lead the way on spending. Eateries like Panera and Chipotle, which offer high-quality fast food, have benefited from consumers trading down.

Last year, Arien Rozelle and her boyfriend started eating in on weekends to save money. But instead of treating it as self-deprivation, they made it fun. Inspired by the campy TV cooking contest "Iron Chef," each would buy random ingredients and see what the other could concoct. It's led to such creations as spelt waffles marinated in coconut milk, said Rozelle, a music promoter.

Of course, not everyone aspires to be a home chef. Plenty of people would rather pay someone else to do the cooking — and cleanup — and will rush back to Olive Garden the minute their finances allow. Two out of five consumers say they're not dining out as much as they would like, according to Hudson Riehle, a researcher at the National Restaurant Association.

Laura Newman, of Bridgeport, Conn., says she and her husband have tried to embrace cooking, but it's hard when both have full-time jobs and homework to help with.

"Some nights," she says, "you just want to go out and have a margarita."