EATING OUT:Restaurants are doing well but it's important that they are correctly branded, located and know their market

THEY SAY THAT restaurant closures are the first sign of an economic downturn. Apparently not.

"The eaterie business - restaurants and cafes - is a growing market within the retail sector," says Nick Crawford of DNG Commercial.

He attributes this to changes in work practises: "The business starts with breakfast and the mid-week evening trade is a new huge trend."

In proportion to the number of set-ups in the Dublin region, the restaurant business is doing quite well, says Crawford.

"A dining culture has been established over the last 10 years and is sustainable as long as the industry fulfils the needs and appetites of the consumer," says Henry O'Neill of the Restaurant Association of Ireland.

"The population in Dublin's city centre is rising," says Crawford. "From Smithfield up, all along the quays and down to the IFSC the explosion of apartment living has created a new city-centre-being who's sociable and needs to eat every night."

Dublin 2, along South Great George's Street up to Aungier Street, Exchequer Street and, parallel, on South William Street, is the dining epicentre of the capital. Proven draws are Yamamori and Brasserie 66. Estate agent Owens sold Verona on George's Street for €400,000 and it's now a fast food outlet.

One interesting opportunity in the area is Cafe 20, opposite Avoca on Suffolk Street, which has a leasehold interest of €450,000 through Owens. Another is the now defunct Il Pomodoro premises on South William Street.

"Historically, restaurant destinations have been in Dublin's city centre - Dublin 2 and 4," says Peter Levins, associate director of Bannon Commercial. "Up and coming locations appear to be more suburban in nature due to the changing spend patterns of consumers."

Ranelagh residents are already spoilt for choice - the addition of a Michelin star to Mint only ups the ante there in terms of competition.

There are two current restaurant opportunities here: Ruen Thai, and the smaller premises, Nectar, which are for sale (the former through Youngs and the latter through Masons).

Brand extension is one proven way to grow your restaurant business. Diep Noodle Bar, a neighbourhood restaurant version of the city centre mothership, Diep Le Shaker, had such demand for its in-house take-away service that it quietly approached a premises on Ranelagh's triangle and set up Diep At Home.

Its weekend trade is astonishing and they've also recently opened a takeaway in Blackrock.

While Rathmines has been considered the poor relation because of its high percentage of let, rather than owned, properties, the advent of Saba to Go and Tippenyaki - a tepanyaki and sushi restaurant - should kick the flatlander territory to touch.

Suburbia is the growth market if you're intending to go into the business, says Henry O'Neill.

Malahide is the jewel in the northside's crown with Silks, Cruzzo and Bon Appetit all pulling in the numbers. The most recent addition is Kajjal, a sister operation to Clontarf's Kinara. Both are highly regarded.

Howth too is reinventing itself, observes O'Neill. The old-fashioned King Sitric has serious competition from Beshoff-owned Ivan's Oyster Bar & Grill. Jaipur is extending its brand to the up-and-coming eating area of Greystones, adds Crawford. Dundrum too has reinvented itself with Mao and Milano represented.

To date, Swords has been under-serviced by restaurants but, due to the volume of new housing in recent years and the development of phase two of The Pavilions shopping centre in Swords, new opportunities now exist, says Levins.

High-end take-away is another growth area and an evolving market from an estate agents' point of view, says Crawford.

In terms of taste and freshness, Bombay Pantry is the Taj Mahal of the take-away business. Its Glenageary premises, which opened its doors a few years ago, has spawned shops in Clonskeagh, Rathmines, Fairview and Bray. The brand recently extended its range to Rathfarnham and to Ashton on the Navan Road.

MD John Sheehan, formerly of the Queens in Dalkey, runs the business with his daughter Emma. Further expansion plans are in the pipeline with eyes on Clontarf/Malahide and Naas or Newbridge.

Some 80 per cent of restaurants go out of business in the first year. The secret to success is to install an established brand and expand its operations.

This has been called the Diep template by some agents.

Saba is a city centre restaurant following in Diep's footsteps. Interestingly, Saba proprietor Paul Cullen spent five years as a partner with Diep. Saba took over the Rajoot Tandoori premises at the back of the Westbury Hotel in September 2006. Business has doubled in the 18 months it has been trading and the restaurant is turning its tables two and three times a night.

Cullen attributes its success to service, fresh ingredients and well-priced dishes and wines. The city centre premises seats 120 and is well located.

He's not ruling out expanding the business into the neighbourhoods of Clontarf, Malahide and Castleknock.

Burgers continue to put bums on seats. Jonathan Dockrell is the chef patron of Gourmet Burger, whose first restaurant opened in Ranelagh last November. The former chef worked at La Stampa and Browns on the Green and he's keen to expand the franchise element of the business.

It is moving from the neighbourhood restaurant model back into the city centre and presently is in negotiations on three premises - all in the Dublin 2 area.

The Real Gourmet Burger Company recently opened in Dún Laoghaire's Pavilion beside other restaurants and brand extensions Cafe Mao and Roly's.

The fit-out and finish is important, says Henry O'Neill of the Restaurant Association of Ireland.

These can cost anything from €100,000 to €500,000, with the majority of restaurateurs opting to spend between €100,000 and €400,000 on premises.

A certain work ethic is required to sustain a business in the restaurant trade, says Owens. He's had a lot of interest from UK multiples who find prices very high and don't proceed.

People often ask why aren't there more steak houses in Dublin, says Crawford.

"There's no doubt that there's a huge demand for it but their percentage of profitability isn't viable," he says. "A steak will cost in the region of €30, whereas a Thai dish can be done for €16 or €17."

Henry O'Neill says: "The secret to success in this postmodern market is an emphasis on the middle market or menus with an ethnic - in particular Thai or Indonesian - flavour run by Irish operators but with authentic styles of cooking."

Traditionally, margins in the restaurant business are tight. "It's not the pot of gold that some people think," says catering consultant Tom Mythen of Tom Mythen & Associates. "A net profit margin of 3 per cent is considered good."

"Gross profit margins need to be between 56 and 70 per cent for the restaurant to do the business," says Owens.

Henry O'Neill agrees. A net profit margin of 5 or 6 per cent is considered decent, and very few premises in the city centre are achieving this.

"We're going into a less sophisticated restaurant era. People want a quick in and out bite to eat and that's where restaurateurs need to be at."