Is it restaurant apocalypse? Not yet, but it is a difficult time.
Restaurant Apocalypse 2009!!! That’s what Willamette Week is calling this time, or something close anyway – I can never find anything on their new website.
With all the news and rumors floating about, I’ve been giving the subject quite a bit of thought. It seems to me, the “apocalypse” has failed to happen. Looking back through the news for the five years this site has been around, Portland is actually slightly behind average in restaurant closings. I’m not saying that won’t change, but for now, we seem to be bucking the prediction of mass chaos and rioting chefs in the street.
Even more interesting, is how many new places have opened. I think anyone who opens a restaurant in this economy is incredibly naive, laundering money, or Camus’s “eternal optimist.” They’d better have a damn good business plan and something that sets them apart from the crowd, like incredible food or drinks. Take, for example, Chez Joly. No, really, take it! They opened at a terrible time, and the food matches. There is nothing about it that makes me want to return. On the other hand, if they ever get the door open, Beaker & Flask has a couple of excellent bartenders in Lance Mayhew and Kevin Ludwig, that will hopefully raise it up to the level of the Bar at Ten 01, which in my opinion, makes the best drinks in the city. If they play their cards right and avoid the pretension of some Portland (cough) “mixologists”, they have a good chance of hitting a stride, which will lure people in the way that Pok Pok and Toro Bravo do. It will be interesting to look back in a year and see which Portland restaurants have survived.
My personal view is that restaurants are going to have a hard time in 2009, but it certainly won’t be an apocalypse. The average restaurateur has been hit with a perfect storm of bad news:
- Cost of goods has gone way up
- Cost of labor has gone up (new minimum wage just went into effect)
- The consumer has much less money to spend, and those that still have it, are throwing it around less freely.
What are they to do? If they raise prices, even fewer people can afford their food. If they drop prices, they can’t pay their labor cost and overhead, like the ridiculously high leases they agreed to when times were good.
If there is one thing I’ve learned working around restaurants over the years, it’s that most restaurateurs are not very good businessmen. Know any chef/owners with business degrees? Anyone? Let’s face it, they are few and far between. They know how to pinch a dollar, and get every possible inch out of a salmon, but when it comes to looking beyond today and projecting a few years down the road, most will give a blank look and mutter something about needing to check the cellar.
I eat lots of meals in restaurants and get lots of gossip from employees. Here’s what I’ve been hearing/seeing:
- Wine is an expensive overhead. The days of huge wine lists seem to be fading, as less and less restaurants can afford to restock. Everyone seems to be cutting back on the size of their cellars.
- I’ve spent a lot of time lately updating menus. Prices have gone up almost everywhere. A week ago I updated a restaurant, one I frequent and found the average entree had gone up over two dollars. There is a fine line between staying in business and scaring away the customers. The restaurant I mentioned above? They crossed that mental line, and I won’t be going back; it’s just too expensive now. Almost everyone has gone up one dollar per item. I updated a menu today where every single item has gone up a dollar. It infuriated me because it shows the owner if flailing wildly, rather than figuring out his food costs. I tend to be a hard-core budget, spreadsheet kind of guy.
- Another thing I’ve noticed is the quiet fading of “organic” from menu descriptions. Organic tends to be a bit more expensive, and costs have to be controlled wherever possible. I wonder if this means we’ll soon be seeing “Costco Farms mescaline mix” on menus. At least one local chef is shopping at the grocery store every day, her cart piled high with items for meals that night. No spoilage, I suppose.
- Cheaper cuts. Prawns are smaller and fewer in number, cuts of meat are less desirable. Portion sizes are dropping (thank God!) I’m also noticing a nod towards comfort foods; people want this type of meal right now. Many of them have the benefit of being a bit cheaper to produce.
- The hard sell. A few weeks ago a server practically sneered the words when he asked if I’d rather have “bright, sparkling water, or FLAT water”. Set a bad tone for the rest of the night.
- Cutting staff. Another fine line for a restaurant, they have to staff up enough for people to get service, but never more than they absolutely need. On the other hand, covers have been wildly inconsistent, varying wildly from week to week.
I’m big on people watching. It’s almost as exciting to me seeing other people get their dishes, as it is when I get mine; I love to watch their expressions when they take the first bite. From my own experience with friends, and from observing other diners, here are some of the things I’m noticing:
- Less alcohol; maybe one cocktail with dinner, instead of cocktails and a bottle of wine, or even more often, people seem to be having wine at home, and then having one glass at the restaurant to keep the buzz going. Restaurants with a reputation for lower markup, and a cellar with value-priced wines seem to be selling the most bottles; especially now that the holidays are over. Lots of bartenders seem to be spending quite a bit of time polishing glasses. Could it be that the hyper-inflation of cocktail prices have finally caught up with restaurants? Let’s hope so. Cocktails are a cash cow for restaurants, and nine or ten dollar cocktails are stupid. In times like these, the average consumer is going to quit buying them and guess what… they’ll get used to going to having a couple at home before going to restaurants. The effect will be long-lasting.
- Splitting of appetizers. I was in northern California a few weeks ago and noticed this everywhere. Before the bubble burst, restaurants weren’t always too obliging, but right now they seem to be happy to do this, and even bring a separate plate! My how times have changed.
- Selecting cheaper items, or even skipping appetizers. When I have to order a $30 entree for a review, I always pause. Is there anything less expensive I haven’t tried? Appetizers are edging upwards of $15.00. Too much.
- There is a price point people don’t seem to want to cross on a regular basis. Places like Por Que No, Lucca, Justa Pasta, and Toro Bravo don’t seem to be as affected as the big boys. Whether true or not, folks seem to feel they are getting a good return for their money. Food carts have lines down the street, with more opening every day.
I could go on, but I think the points have been made. Is it restaurant apocalypse? Not yet, but it is a difficult time. So far, other states have been hit much harder than we have, but the economic troubles seem to have taken a bit longer to hit here. The survivors will be the businessmen, restaurateurs that didn’t get sucked into a high overhead, and are finding creative ways to meet the expectations of the dining public without raising prices.
I think Andy Ricker of Pok Pok is a master class of how to open a restaurant: build a tiny shack off the beaten path, and sell everything to go. Let the food speak for itself. Build a buzz. Remodel a basement for minimum cost, train the heck out of your staff, and slowly expand. Let more buzz build. Add an upstairs. Let the buzz build some more. Something tells he doesn’t have a lot of debt, but he has a wait every night. Bloody brilliant; I’d like to shake his hand. Now he is going to single-handedly jump start Chinatown. I can’t wait. Let’s hope he has been keeping notes.
I think the places that have good food, friendly staff and prices consistent with quality will survive this economy. Ken’s Artisan pizza, Lauro’s Kitchen…always packed. Bunk Sandwich’s has a line out the door for lunch. A biz degree can help, but common sense can help you float thru a hard time.
> Another thing I’ve noticed is the quiet fading of “organic” from menu descriptions.
Well, at least some good will come of the downturn.
Dude, they sell mescaline at Costco now?! Gotta get a card. I believe the salad stuff is mesclun. Interesting article, though! We went out for lunch yesterday and were blown away by the bill. One shared appetizer, 4 units of alcohol, and tip set us back $54. Plan to drink at home from now on, except for the occasional happy hour.
my thoughts exactly, salT! never had any interest in costco until now. oh the times are changing. want to split a membership?
My experience this weekend tells me that things can’t be so bad. We decided at the last minute to go out to dinner on Saturday night. I must have called 5 or 6 restaurants that I would perceive is good value place to see if they could accomodate a table of 4 at 7 pm. I would never have even bothered a few months ago, but with the economic downturn, I thought it was worth a shot. Every one of the places I called said they were full and could not seat us until 8:30 or 9 pm at the earliest. That has to be a good sign for the health of the industry, doesn’t it?
Agree that places like Pok Pok and Toro Bravo are setting a good example. Biwa is another one – they seem to a lot busier now than they were 6 months ago – the last few times I have been in there it’s been packed.
I’d believe this “Apocalypse!!!” talk if the places closing were popular/well-loved, but so far that doesn’t really seem to be the case. But, having said that, it’s obviously not easy out there right now.
I hate to think what our options would be if bean counters ruled the menus. Folks who start restaurants here generally do so out of a passion for making good food — running the business often gets less enthusiasm. But regardless of economic conditions, it’s well known that the restaurant industry has always been a high-overhead venture. Without a good plan and regular customers, you’re gonna fail.
Regarding increasing menu prices, I’ve also have seen a few examples of recent price increases that seem to support FD’s claim of management “flailing wildly, rather than figuring out food costs.”
Not all of these are due to our current state of affairs, though. A certain local Tex Mex joint has made it a regular routine to increase prices across the board, often several times a year. When the owners left town, the quality of the cooking went way downhill, and yet the routine continued — and this was going on back when the economy was in much better shape. For me, it didn’t take them long to cross the line from worth it to rip off.
I’m reminded of a quote a NYC art dealer friend once made: “If we can reasonably ask $5,000 for this painting, it only makes sense to ask $10,000 for it.”
Another place that really LOVES to jack up their prices is Red Star. Last year they increased prices by 20% – 40%, while cutting portion size–and this was after they had previously raised prices 10% – 20% the year before. Oh and they were no longer willing to accomodate any special requests or substitutions on the menu.
I wonder if they’ll now want to raise prices again, given their recent remodel and cost increases? And I bet they can’t imagine why greed and hubris has emptied their restaurant (that was only half full at best to begin with).
Oh and apparently Urban Farmer has received directives from Sage corporate to use cheaper cuts of beef and raise prices.
Cheaper than bavette? Their “steak” option for lunch is already the trim in most restaurants. I’m all for utilization; make stock with it or grind it up for the burgers, but don’t sear it and serve it.
Pearl District says
Red Star is terrible anyways. Let them raise their prices.
Well, that’s certainly true! I can tell you, ironically, they’re convinced they’re fabulous and everyone else has the problem!
I could send you a picture of a dish they presented to me under the pretense of “Mac & Cheese” but I don’t want to make you sad.
Heh. Seen it. Scary, no?
That’s weird zumpie – I looked at Urban Farmer’s menu recently and seemed like they had lowered prices since opening.
Maybe they realized the folly of it, then! I know the hotel has significantly lowered their rates (like a quarter to half of what they originally wanted/expected)—but the buzz was UF was going to raise their prices.
However, since their bargain happy hour is what brings in biz….I guess they saw their cash cow.
Something I notice across town is a LOT of promos/etc…..anything to get people in.
Food Dude says
I’ve noticed a slight drop in their prices. I heard the other day their room rates have plummeted to the area of $100!
There are a ton of promos out there. A friend of mine got a pack of postcards in the mail with large discounts for places like Ten 01, Oba, etc.
And they’ve taken business they wouldn’t have even looked at 6 – 9 months ago on the group side. They’re apparently busier now, but with all the staffing and overhead they carry, they might well still be losing money.
Seems like raising prices at all in this business climate shows a lack of business acumen. But I’ve never run a restaurant. I do know that I’m going to a lot fewer of them these days. And I haven’t ordered a cocktail or a appetizer over $8 in a long long time.
Food Dude says
I can understand why restaurants are raising prices; food and labor costs have gone way up. What I don’t understand is some restaurants that have raisee every price by $2 or whatever. It shows a lack of thought, and gives the impression of greed. Figure out your costs and adjust accordingly!
Labor costs way up? Not so much. 50c an hour FOH (we can probably assume most BOH are still all getting $10 an hour until minimum wage catches up with that) on a 500k turnover and 15% FOH labor cost would be barely $5,000 which is 1% of turnover. A 10% increase in food cost represents around 3% of turnover.
Playing devils advocate though, if you assume food costs increased by 20%, and some proteins have easily jumped 20%, then a $25 dish would need to go up to $26.75 to stand still. There’s your $2 justifiably justified (more or less)
Food Dude says
That doesn’t explain a mixed green salad increasing by $2, nor many of the other items I’m seeing with similar increases.
We also have to consider (which can be hard) the last time a restaurant raised its prices. In some cases, the price bumps account not just for the recent wholesale increases, but for general inflation before them.
Food Dude says
I was just hearing on the news, that restaurant industry lost 2,700 jobs in December. That’s a lot of people from one industry
Especially during what’s supposed to be its busiest season. They were further crippled by the artic blast of 2 weeks.
check out sydney’s cafe for really good sandwiches and plates at a very affordable price.
Pearl District says
Very affordable sandwiches at Sydney’s? They’re good but like nine bucks. That’s not “very affordable.” That said, I go there all the time. They are good sandwiches. And the scones rock!
My partner and I had the opportunity over the past couple of years to analyse the financial records of a fair number of Portland restaurants and then to talk in-depth with the owners about their business and marketing plans. This was an AMAZING education.The owners we interviewed had no idea what it takes to break even in a small- to mid-sized restaurant operation. They had no business plan. They didn’t know how to train, manage, and motivate staff. Half the time they didn’t know food either. You might be surprised at the number of restaurants that are paying $6,000 to $10,000 a month in rent. You have to be consistently packed to make that work. I agree with FoodDude: PokPok is a great example of how to grow a business. So what if the atmosphere is a little dumpy. You can pretend it’s charming. The flavor that explodes in your mouth with each bite will bring you back again and again. If he owns the building, he’s REALLY smart.
I think there’s a lot in what you say about the restaurant economy right now, Dude. A lot of restaurateurs are not particularly good businesspeople. And it’s a little scary out there to get a new place open, especially on the upper middle to higher end. And responses like raising prices instead of figuring ways to cut costs as a way to get through a crisis is foolish, IMO.
But my feeling is that it may be premature to hold to any sweeping generalizations. I think there’s a lot of movement right now, and certainly people are scared and are being cautious. There is certainly a shift in people’s dining habits, and businesses need to be able to identify these quickly and make adjustments.
But I’ve always believed that the restaurant business is not all that different from most other small businesses. Let’s face it, your average bookstore owner – or the proprietor of a small boutique, or shoe store, or coffee shop, or knick knack shop – does not usually possess an MBA from Harvard Business School. And if they did, I’m not convinced they would have all that much more a chance of success. For many small business people, in fact, rejecting the MBA track is often paramount to why they decided to become small business people in the first place.
I’m not suggesting for a moment that that means they should reject the need for the elements of a good business – a solid plan, marketing strategies, strong location, cost controls, adequate capital. But there are a lot of other elements that go into the success equation of a small business. Some controllable, some not.
Much is often made of the high risk involved in opening a restaurant. Certainly true. But I think that the risk involved is not substantially different than that of most other small businesses, with a possible exception (and keep in mind, this is a theory of mine and mostly anecdotal – but I believe it to be true nonetheless). The restaurant business, more than, I believe, just about any other business, attracts a lot of people who shouldn’t be in the restaurant business – they’re temperamentally unsuited for it, or they don’t have the training or financing but think they’ll make it on talent alone (i.e. my first place 22 years ago in NYC). But they’re lured by the fantasy – it’s glamorous, or exciting, or they can impress their friends.
I believe if you eliminate a lot these folks, then the chances of success in the restaurant business are about the same as most other small businesses. Still hard, but not undoable. But there are still the intangibles – luck, a changing economic landscape, etc.
I think that many of the Portland restaurants that have closed or had problems lately would have anyway, despite the economy. Lucier may have been doomed from the start. Genoa has been running on fumes for several years now. There has been a recent boom in the past several years in really good restaurants opening in Portland. It’s not surprising to me that there would be a shaking out of the old guard for the new. And that mediocre places would have a hard time when up against all the really good places that have opened recently.
People are definitely being more careful with their dining dollar. But they’re still spending them. And it will take some quick thinking and mobility on the part of restaurateurs to figure it out.
But how long has this downturn been going on? A few months? I think there’s a lot of flux right now, and maybe too soon to draw any hard and fast conclusions. Someone mentioned that November?December is a good time of year. I beg to differ. For some places maybe, but I most places see the holiday season as great for people having Christmas parties, but often people have too many commitments and too few dining dollars and get burnt out and just stay home to go out much. And January traditionally is the worst month of the year. Plus the snowstorms. Not at all surprising to me that restaurant’s bottom lines are tight right now. But some of this has nothing to do with the economy.
I think one of the worst things that business owners can do in times of uncertainty is run too scared and make assumptions based on insufficient evidence. Caution is good. But reacting in a way that is penny-wise and pound foolish can create a
self-fulfilling prophecy that can doom a business. Cheapening your product, cutting staffto a point where service is compromised, raising prices when people are counting pennies – these can buy time but ultimately rove to be fatal if it drives away customers who came for the quality and value of the product. It’s like the American car companies. Their product sucks, and has for years. The economy is accentuating their problems, not causing them. And all the bailout money in the world won’t fix their problems, just let them survive a little bit longer. Likewise, a restaurant that isn’t satisfying their customers has no chance of survival by just holding on a little longer. They’ll still suck when the smoke clears and the economy improves.
Pearl District says
This is the most right-on summary of the current state of the restaurant economy that I’ve read to date. Willamette Week has been calling the current state of the economy the “restaurant apocalypse” and yet nearly every place that has closed has been unremarkable. In my opinion the state of the restaurant economy is much stronger than the state of Willamette Week’s current food coverage.
Back on track, Chefken is right. There’s a lot of competition, and many new places are doing extremely well still. The good places will survive, the bad places will be weeded out.
Food Dude says
Thanks for the l o n g and well-worded comment. For the most part, we seem to agree. Next time I’m just going to give you the title and have you write the piece ;)
I don need no stinkin’ badges.
On the comments thread of “i thought Restaurant X would be slow but it was surprisingly busy”, I met a friend at Caffe Allora last night at 6pm for dinner. I figured on a Tuesday night, it wouldn’t be a busy night. In fact, the bartender was the only FOH employee that night, not surprising for a nice small place like CA. The restaurant picked up steam and by 8:30pm when we left, it was probably 80% full and the bartender was moving fast to keep everyone happy. I expected the place to be slow. 4 course dinner for 2 with multiple drinks was $124, pretty reasonable.
IMHO, people who have responsibly managed their personal funds will continue to go out to dinner, keeping an eye on prices, tolerating a reasonable level of price increases.
grapedog, how nice for YOU that the economic downturn has not affected you in any way. However, you might like to bear in mind that there are many, many people whose jobs have been eliminated (we do have the 5th highest unemployment rate in the nation) and/or pensions and mutual funds have been lost (or all but lost) forever. And these are, in many cases, people who have played entirely by the rules and been fiscally responsible all their lives.
These days, there are many, many people for whom $124 dinner for two would be madly out of their price range. For people who work in a myriad of industries in which their income is directly affected or even eliminated, you might show a bit less smugness and a bit more sympathy.
Food Dude says
I have to agree with Zumpie. I know responsible people who have been out of a job for 7 months. They had six months savings in the bank. Their 401KI’s were cut by almost 1/2. Unemployment is running out. To them, $124 for dinner is now a small fortune. Your statement about responsible management of personal funds is really callous.
Good Food For Me says
What I’ve been seeing is restaurants raising their prices like everyone else dining out. The thing is though that the small restaurants with less overhead are raising their prices the same as larger places with significant overhead. I’ve also seen as Food Dude said that the price of cocktails has now blasted past the moon and is headed for the next solar system. $10 for a drink in a place the size of a postage stamp that has no more complicated ingredients as a place that has a lot more expenses. It is pretty telling when you get gift cards for $20 in the mail from 3 major restaurant groups and they are not even telling you that you have to order food. They are just trying to get people in the door – period. The media is a good indicator as well – The Menu Guide – anyone seen it around? The restaurants are dropping advertising and just giving their food away, or their liquor or whatever. Some places may be busy but then again no one wants to tell you that they are not doing well – that alone can be the kiss of death. The fact remains and is very telling just on the Food Dude poll. 2 people are still eating out as before while 65 have cut down. If that does not effect the restaurants then the ones who are eating out less must have been eating outside of Portland right? This is just the tip of the ice berg. The farmers are not doing so hot right now and prices are through the roof. It’s times like this when that business degree does come in handy because bottom line is owning a restaurant is a business and passion aside money pays the rent.
Food Dude says
Oh, you just reminded me! Remember when I said something about the menu guide dying, and I got all those angry denials from them? Now that you mention it, I haven’t seen a copy in ages. I’m going to go look!
Just out of curiosity, I checked into their rates, and found them to be ASTRONOMICAL.
Good Food For Me says
O.K. here it is the 26th of Feb – has anyone seen a menu guide yet. Just noticed the new Portland Monthly Magazine is out – all 97 pages of it – down from 176 pages in June of last year.
quo vadis says
Gotta disagree about the business degrees.
Allotta people with MBAs are responsible for a lot of fiscal mutherfuckery right about now. Small businesses have existed on this earthy much longer than business schools have. A degree can’t replace common sense.
Oh, FoodDude… am I allowed to say “mutherfuckery”?
If not, a thousand pardons.
quo vadis says
OK, just a thought to those who think they know how much and when a restaurant should raise their prices and that small places “with less over head” shouldn’t raise their prices like the other places.
1) the raise in minimum wage is not just the actual $8.40. It has other hidden raises in overhead as it drives the businesses taxes, unemployment & worker’s comp up too.
2) a 20 seat restaurant pays as much for all its licenses, fees and permits as a 200 seat places. All these have gone up steeply this year
3) the raise in food cost actually hits a small place HARDER than a big place. Large places tend to pay way less for all their products based on volume discounts. Add to this that the delivery fees charged are the same for a place getting 50# of product as one getting 1000# of product. And a small place is likely to have to pay those fees more often based on less stoarge space.
4) the bigger the place is (assuming higher volume goes with bigger space) the less merchant services (credit card processing companies) charge them for accepting credit cards. Often much, much less. That is why you are more likely to find small places (yeah, like mine) that won’t do multiple credit cards at a table.
5) the financial crisis has led to even successful and responsible businesses to lose their lines of credit and have their business credit card lines reduced while interest goes up. So a place that has successfully navigated their overhead may still need to raise prices across the board because they are suddenly, with no warning having to pay COD for everything.
It is a pretty big illusion that a smaller place automatically has a much lower overhead. Just some food for thought.
Food Dude says
What she said!
Good Food For Me says
I do agree with all that you have said, however; the largest expenses are build out, executive chefs and general managers, bigger staffing with benefits (which far outweigh the visa charges you might have to pay) and rent. Large kitchens cost a small fortune on their own as you all know. Illusions aside smaller places don’t automatically have lower overhead but then again most are chef/owners and so the overhead of staffing alone being less and of course the rent hopefully do make for lower overhead. I would hope that if you are efficient and effective you can bring overhead down in smaller places. Some costs might be higher but I still don’t believe that it justifies the huge jump in some places prices and the now becoming standard $8 – 10 cocktail not to mention the cost of appetizers which has really shot up whether the food for it has or not. We’ve all seen a fine example of this first hand with Starbucks. They allowed little corner stands to suddenly increase their prices to the rates of Starbucks – it was a boom for them and we all became accustomed to the $5 coffee – for a while. They had zero increase in overhead. First hand knowledge here! All I’m saying is that it is shooting yourselves in the foot because if people feel like they are being gouged they might buy one but they don’t buy two and they don’t return and you could have had a regular.
quo vadis says
Erm… I think you didn’t see the continuation of my statement which is below… the one about not relying on price increases?
Good Food For Me says
Yeah, I saw that it just that it seems no one does it really. Hence go out and find us some $5 cocktails! again! We always want to support the locally owned places!
quo vadis says
I should add that, that said, a restaurant shouldn’t rely only on rasing prices to survive. That is just bad business. I haven’t raised my food prices at all since summer- the exception being stuff I price daily like seafood which goes up and down every day.
It is good for a customer to remember that when suggesting a place cut overhead instead of raising prices at all what you are often talking about is cutting hours for staff. Because most overhead is fixed (rent, utilities, permits, etc) and others (like switching ingredients) could lead to an inferior product. The most mutable cost of doing business is staffing which just perpetuates the down economic cycle.
I hope for a day when the relationship between guests and owners is more about mutual respect and give and take and less the “master & servant” that is becoming so prevelent.
Something to think about when you, as a table of two, demand a table that seats four in a small business. Or when you show up 30 minutes late for your reservations, or when you send one person of a group 6 to “hold a table” for the rest that will be arriving 45 minutes later. Not only does that hurt the income of the business, it also, hurts the serves, busboys, dishwashers and cooks. Less revenue due to empty seats equals less hours on the schedule next week. And for front of house empty seats are also tips lost.
I’m not saying business owners conduct themselves in a perfect manner. But when one steps in to a place of business one can ask themselves- am I helping this situation, or am I making it worse? Because much as retailers need to add the cost of theft and customer breakage into their prices so do restaurant and bar owners need to price customer jackassery into the food and drink.
The table that shows up 30 minutes late for their reservations is as to blame for price increases as an extra 10cents a pound for chicken.
Don’t forget the 20 top resevrvation that makes it during prime-time dinner hour so you put 3 tables together only to be told when they get there only 12 can make it. And then all the do is sit down and have a couple glasses of wine
with the state of the restaurant economy now thoroughly covered, can i turn to a side issue? anyone know what the current status of beaker and flask is?
Food Dude says
I’ll have info in tomorrow’s news roundup
Tim L says
Speaking of Andy’s Chinatown location, was the Hung Far Low location not supposed to open in late January? Is the name “Ping” the correct proposed name?
Food Dude says
February, and yes, Ping. I’ll have more in the news roundup, probably tomorrow (thursday)
I’m not in the industry, but I can think of one factor that does make running a restaurant more complex — and probably more dependent on steady cash flow — than many to most other retail businesses. Put simply: food spoils.
Where a lot of retail categories are concerned, a business may be able to “coast” for quite a while by scaling back on its purchase of new inventory and by selling off older inventory at marked-down prices to keep cash coming in. Once a book or a pair of shoes or a sofa is on the sales floor, it costs comparatively little to keep that product around until it finally does sell. And when it sells, it’s still likely to bring in more than the retailer paid for it.
A restaurant operator can’t do this, because (a) most of his key ingredients have very short shelf lives, (b) most restaurants, by design, are not equipped to store more food than they need for day-to-day operations, especially for long periods of time, and (c) with some exceptions, food depreciates pretty much all at once — either it’s usable (and you can charge full price for it) or it’s spoiled (and its value drops to zero). Now yes, there are qualifiers for some of this, but shelf-stable (canned, vacuum-packed, etc.) ingredients require storage space, some ingredients don’t have cost-effective shelf-stable substitutes available, and food suppliers — many of whom have these same product-cycle issues themselves — tend to want to be paid on a timely basis. And meanwhile, in the front of the house, anything you do to reduce your volume — cut back hours, order less food — directly reduces your ability to generate income.
And that may be the key issue for restaurant operators in the present economy: volume. Restaurants that have had steady traffic need to maintain that traffic level; restaurants that have had marginal traffic need to either bring in new business or find themselves rapidly shaken out of the marketplace. Pastini’s “Pasta Stimulus Package” offers and the frequent dining programs the McCormick & Schmick group and the Stanford’s/Newport Bay/etc. group have recently rolled out make a lot of sense in this climate — both are about attracting and retaining steady customers. Price increases are a much trickier animal — unless carefully implemented, they can have a negative effect on business volume, and that’s a very bad consequence just now.
Food Dude says
Your comment reminds me of the Hebberoy debacle. Ripe had a nearly perfect model – not only did they know how many people would be in every night, but they all would be eating the same thing, and they didn’t have to waste money on expensive atmosphere. It should have been a cash cow. Of course Naomi must think so too, since she has expanded on that idea at Beast. Then there was Gotham Tavern, where towards the end, Michael admitted that he’d never sat down and figured out if they could do the covers necessary. There is a standard formula for restaurants that insures you have enough seats for overhead… I wrote about it at the time. Anyway, I loved Gotham, and wanted to go down and kick his ass when he made that statement.
Good Food For Me says
Yes, Restaurants Unlimited started a program which is nice and then again The Portland Dining Club has a great program too – if you buy just two certificates you get another one at no charge. That is tough to beat since you also get rewarded with services you are likely paying cash for – like hair cuts at Hair M or salon visits etc. The Entertainment two for ones are o.k. as well. The only thing is that the restaurants loose out with Entertainment books because they are just giving food away. In times like these though each kind has its own benefits.