Who says Kyle has too many restaurants?

By WES FERGUSON

First, the good news: Kyle is getting an IHOP. Applebee’s and Sonic are on the way too. Now, the bad news: this area has way too many eating places, according to a new study.

A consulting firm hired by the city of Kyle has found that supply for full-service restaurants outstrips the demand by a margin of nearly 2 to 1. And not just for Mexican food, either:

• $76.9 million: Demand for full-service restaurants in the Kyle trade area


• $141.2 million: Supply of full-service restaurants in the Kyle trade area

A glut of grub?

That can’t be right.

“It looks bad at first blush, like we’re oversupplied, but it’s one of those tricky pieces of information,” said Diana Blank, the director of economic development for the city of Kyle.

The truth is a little more complicated, she said.

Last spring, Blank’s department hired Catalyst Commercial, a Dallas-based retail consulting and market research firm, to assess the city’s power as a regional retail hub. Catalyst interviewed more than 7,000 shoppers and diners and determined the city’s primary trade area stretched about 20 miles, down to San Marcos and up to Southpark Meadows in Austin.

And that’s the problem. San Marcos and Southpark Meadows are already loaded with restaurants. Kyle, an exurb, is the void in the middle.

Numbers from the state comptroller’s office reveal the gap along the Interstate 35 corridor: Full-service restaurants in San Marcos did $30.3 million in gross sales during the first two quarters of 2011. Southpark Meadows brought in $18.3 million.

In Kyle, meanwhile, sit-down restaurants earned only $3.6 million. They also earned less money per restaurant.

The consultant and city officials are looking on the bright side, however.

“Statistically it may appear you’re oversupplied, but it could represent that you have greater gravity and are pulling from a larger trade area,” said Jason Claunch, Catalyst’s president. “It’s really tough to oversupply restaurants because of the amalgamation benefit. Restaurants attract more restaurants. You create a gravity. You become a node.”

“We may not know what we want to eat,” he added, “but we know we can go to Kyle and find something.”

They can certainly find Tex-Mex. Tuesday’s lunch crowd at the Palm Cafe could agree on that:

“No more Mexican,” said Kristi Rose of Kyle.

“Anything other than a Mexican restaurant,” added Kristen Schmidt of Driftwood.

And said Claudia DeLeon, who was eating tortilla soup one table over: “We know we need something other than Mexican restaurants or fast food. I think Kyle could support more options.”

More options are on the way: IHOP and Applebee’s are both planning to build on the Interstate 35 access road by McDonald’s and Target. The two developments will come before Kyle’s Planning and Zoning Commission as soon as January. A Sonic Drive-in and Walgreens store are also planned for the corner of FM 150 and FM 2770.

Mayor Lucy Johnson said a lot of Kyle residents have talked to her about their desire for more diverse dining in Kyle.

“It’s really brand-specific,” she said. “It’s not ever, ‘We want more restaurants.’ It’s, ‘We want an Olive Garden. We want a Red Robin. We want a Chili’s.’

“I’m like, we’re trying, but the city of Kyle government is not going to open a Red Robin.”

Another lunch patron at the Palm Cafe on Tuesday said he would be pulling for an Indian or vegetarian place to come to Kyle. “I’m not a vegetarian,” said Joe Hoggatt of Kyle, “but sometimes I want something with not much meat.”

Full-service restaurant sales are smaller in Kyle ...

... The same goes for local fast food places

Source: Gross sales during the first half of 2011 are provided by the Texas Comptroller of Public Accounts. The dollar amounts for the Southpark Meadows area of South Austin are based on sales in the 78748 zip code.