A year after opening three different restaurants at Revel, the Garces Group is looking to open a fourth in the megaresort.
The expansion demonstrates the confidence the restaurant group — headed by well-known chef Jose Garces — has in operating several independent restaurants inside an Atlantic City casino.
“We’ve been very fortunate to be very successful — have a great relationship,” said George Atterbury,director of restaurant operations for Garces Group in Atlantic City. “The property was a big attraction for us.”
While the number of independently owned restaurants operating inside casinos and other establishments has been part of a growing trend across the country and in Atlantic City for years, it spiked significantly last year, when sales at third-party businesses increased 39 percent to end 2012 at $246 million, according to the state Division of Gaming Enforcement.
Part of that increase may be attributable to last year’s opening of Revel, where nearly all of the restaurants and businesses operating inside the megaresort — such as Garces Group’s Amada, Village Whiskey and Distrito Cantina — are independently owned and operated.
“The three concepts are very different,” Atterbury said, adding the diversity of offerings allows each eatery to attract a different clientele and offer patrons options. “That was the whole thinking behind us being at Revel.”
Across the city, restaurant and other nongambling amenities in Atlantic City saw high revenue growth last year, as measured by luxury- and sales-tax collections.
Luxury-tax collections, which come from a tax on retail sales in Atlantic City of alcoholic beverages, lodging rentals and other amenities, generated a record $12 million in the third quarter of 2012, said researchers at the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College. Sales tax collected by Atlantic City-based businesses also increased nearly 11 percent in 2012, according to the Division of Gaming Enforcement.
Industry observers said they expect the trend to continue, particularly as Atlantic City adds more well-known restaurants and gains a reputation for food and drink.
“I think there is room to expand, and the more the city does to promote the destination, the more we become known for culinary greatness,” said Brian Tyrrell, associate professor of hospitality and tourism studies at Stockton. “You can parlay that into a really great culinary destination.”
Over the past decade, Atlantic City and surrounding areas have seen a resurgence in the number of restaurants.
The number of full-service restaurants in Atlantic County was 322 in 2010, an increase of 37 percent from a decade earlier, according to the latest data available from the U.S. Census County Business Patterns. In comparison, Cape May County had 264 full-service restaurants in 2010 — or about the same as a decade earlier — and Cumberland County had 82 full-service restaurants — or 28 percent more than a decade ago, according to the census.
The increase is a reversal from decades past lasting through the 1990s, when many eateries began closing because they couldn’t compete with casinos in Atlantic City, which offered buffets and other food options.
Angelo Mancuso III, owner of his family’s Angelo’s Fairmount Tavern, which marked its 78th year in Atlantic City in April, remembers that era. The tavern, which specializes in Italian cuisine, was able to survive by depending on customer loyalty, he said.
“I feel we have a good product, people know us,” Mancuso said. “Our prices are reasonable.”
With more competition in and out of casinos, the tavern has found its proximity to The Walk retail strip has netted it foot traffic and customers.
“It’s right at our doorsteps,” Mancuso said of the retail stores. “When (shoppers) come down, they’re going to want to eat.”
While Revel may be the most recent example of casino resorts promoting a third-party restaurant business model, The Quarter at Tropicana Casino and Resort preceded it. Its mix of retail stores and restaurants includes Cuba Libre, which was one of the first tenants to lease space there in 2004.
The average restaurant patron wouldn’t know Cuba Libre was run independently from the casino, but management does and it makes a difference, said Barry Gutin, owner of Cuba Libre. Unlike restaurants that have a licensing or other agreement with the casino, Cuba Libre doesn’t need to seek permission from the casino’s marketing department before making changes to the menu or service style.
“We can operate more nimbly,” Gutin said. “We also have an independent work force that is independent.”
Union issues play a key role in determining whether casinos lease space to independent third-party restaurants or operate the establishments themselves. Based on agreements struck with Local 54, most casinos can’t increase the number of non-union establishments on their properties, said Bob McDevitt, president of Local 54 of UNITE-HERE, the city’s largest casino union.
If a non-union restaurant closes, that space can be occupied by a new non-union establishment, but union shops must be replaced by entities that have a contract with Local 54. The contract can fall under the same one Local 54 has with the casino, or it can be struck independently, McDevitt said.
“We’re very flexible,” he said.
The union’s primary goal is to protect workers and to ensure fair pay and that workers, such as dishwashers, are paid more than $8 an hour, McDevitt said.
Revel has been an exception to the union rules, although Local 54 has been at work to try to unionize the work force.
Atterbury said the Garces Group has found success in hiring staff, retaining about 90 percent of the full-time employees in the year the restaurants have been in operation.
“That’s probably why we’ve been so successful is because our staff,” he said.
McDevitt disputed that amount, saying Garces has a much lower retention rate overall when part-time workers are factored in.
“I don’t see Garces Group holding 90 percent,” he said. “The bulk of their work force is part-time.”
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