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Multiunit operators based in the Midwest expect continuing business improvement in 2004, based on an upturn in sales that began during the last half of 2003.

While the region's economy is expected to improve markedly this year compared with 2003, both job and population growth likely will remain below the national average, according to the National Restaurant Association 2004 Restaurant Industry Forecast.

In addition, projected eating-and-drinking-place sales growth for the Midwest will be the lowest in the nation, growing 3.8 percent to $75.04 billion. On the plus side the rate is still positive after adjusting for inflation.

"There is cause for optimism but not celebration," says Joe Carlucci, partner in Chicago-based Carlucci Hospitality Group. Corporate spending in particular has risen in his three suburban Carlucci restaurants, where increased wine sales are a telltale sign of more spending.

"We make more money on corporate business because they spend more," notes Carlucci, who estimates that 30 percent of his customers are in the restaurants on business occasions.

"People are more willing to step out a bit in a reversal of cocooning," says Diane Swonk, chief economist for Bank One Corp. in Chicago. "We have more money in our pockets, and jobs are coming back."

Swonk credits diminished fears of terrorism for part of people's improved willingness to go out for entertainment. According to the NRA, that revival will help 2004 eating-place sales in Illinois reach $15.93 billion, up 3.8 percent from the figure for 2003.

Lettuce Entertain You Enterprises, also Chicago-based, is experiencing a business upswing that began last summer and continued with strong holiday and gift certificate sales. "Hopefully, that will increase even more next year," says Kevin Brown, chief executive.

Chicago convention bookings are lighter this year than last, Brown observes, but that doesn't worry him, since Lettuce restaurants are not dependent on convention business. "We have a nice balance between city and suburban and price ranges, so we protect ourselves," he says.

The company plans to open at least four new restaurants, including a fifth Wildfire, this year and has several more openings, including new concepts, in the works for 2005. "There is a lot of energy and enthusiasm," Brown says.

A positive report also came from Rodney Anderson, owner of the Kansas City, Mo.-based Anderson Restaurant Group, which operates the four-unit Hereford House chain and Pierpont's at Union Station. Anderson anticipates between a 5-and 10-percent increase in revenues this year.

"Business clientele is coming back to entertain, and people are feeling more job security and going back out," he explains.

He says he noticed that change beginning last August and experienced an 11-percent sales increase in December, when customers booked a lot of parties.

"Some people are still complaining and guarded," Anderson says, adding that he and some of his peers remain concerned about extraordinarily high beef prices, which are up to 30 percent higher than they were a year ago. "I think beef prices will stay high this year," says Anderson, who has raised some menu prices slightly and promoted alternative meats, such as pork and lamb chops.

The NRA expects restaurant sales in Missouri to reach $6.47 billion in 2004, up 3.9 percent from sales in 2003.

Eddie Martini's, a high-end steak house in Milwaukee, reports an upturn in business entertaining that is expected to continue. "Our customer count is very steady," says Chris Murphy, general manager, who reports annual sales of about $3.5 million and a dinner check average of $56.

Restaurants in Milwaukee and a wide surrounding area benefited last summer from the Harley-Davidson 100-year anniversary bash that attracted Harley owners from all over the country. Paul Cunningham of Schreiner's Restaurant in Fond du Lac, some 60 miles away, was one such beneficiary.

"We had a great experience from the Harley 100," says Cunningham, who expects spillover business this year from the PGA Tournament at the American Club in Kohler as well as from Road America sports car races in Elkhart Lake and other events. Restaurant and resort operators in the northern part of Wisconsin, however, are less optimistic owing to business declines of 20 percent or more in the last two years.

The NRA projects that Wisconsin's eating-place sales in 2004 will reach $5.75 billion, up 3.8 percent from the figure for 2003.

"Wisconsin's success is so weather-related," explains Cunningham, who is immediate past chairman of the Wisconsin Restaurant Association. "Some people are finding new ways to attract new business year-round," he says, mentioning indoor water parks as one example.

Cunningham is concerned about smoking-ban proposals in various municipalities and does not expect the state's recent lowering of the blood alcohol concentration, or BAC, level to .08 percent to help the industry.

The Ohio Restaurant Association also is working against smoking-ban proposals, including one that passed in the Toledo area. "Restaurants are down because contiguous counties without bans have increased business," says Joe Vittorio, owner of Riccardo's Catering & Banquets in Columbus and currently chairman of the ORA.

While he observes that high-end restaurants continue to suffer, moderately priced ones, particularly chains, are doing better now than in the last one and a half years, and he expects that trend to continue.

The NRA expects Ohio's restaurant sales in 2004 to hit $13.52 billion, up 3.6 percent from the 2003 figure.

"We have pockets in the state that are less affluent than they used to be that are manufacturing dependent," Vittorio says. Dayton, Columbus and other cities are attempting to rejuvenate old downtowns, he notes.

Economic recovery is lagging behind in Michigan, a neighboring state that also has a high percentage of manufacturing. Detroit-based David Littmann, chief economist of Comerica Bank, blames "an increasingly difficult business climate in the state that has become relatively less attractive compared to the South, West and abroad" for the state's woes.

Littmann cites "an inflexible labor market, an onerous regulatory climate and a $1 billion state budget deficit" as deterrents to business expansion. There also is a related lack of population growth that Littmann calculates is half the national rate.

In spite of those issues, Littmann predicts the state's economy and employment will accelerate this year. He expects sizable tax refunds in the first quarter and more businesses to rehire those they've laid off, which would boost disposable-personal-income expenditures on items, including food away from home.

"The last couple of years have been a challenge," agrees Matt Prentice, chief executive of Unique Restaurant Corp. in suburban Detroit. "We see things improving as long as interest rates don't skyrocket."

His social catering bookings for January are setting a new record, but corporate spending during the January auto show is far behind, a fact Prentice blames on a slashing of corporate entertainment budgets. He recently diversified his restaurant and catering business to include consulting for private country clubs.

The NRA projects 2004 eating-place sales in Michigan will grow 3.9 percent to $11.39 billion.

The economy in Minneapolis and St. Paul, Minn., is starting to revive, according to Tom Day, vice president of government affairs for Hospitality Minnesota, an umbrella organization for the Minnesota restaurant, hotel and resort associations. "Operators are seeing more growth from week to week overall," he says.

"People were sitting on their money," Day notes. "Now people are loosening up more and feeling more optimistic. Things have been down so long that people are getting out of their rut."

According to the NRA, Minnesota's restaurant sales in 2004 will reach $6.14 billion, up 4.2 percent from the 2003 figure.

Day adds that growth in the hospitality industry in Minnesota has been faster than in some other industries in the last few months. "The white-collar sector got dinged up," he says.

He says also that the state's many rural-resort owners are hoping for enough snow this winter to bring out travelers who stayed away the past several winters.