Hard times: How do restaurants cope?

[Robin Garr]

I'm actually kicking around a story idea, and would love to have serious input from both consumers and people in the business: We've been through a period of economic hard times, and even with signs the market is going back up, high unemployment is still a big issue in Louisville.

We've sadly lost a few great eateries to the crunch, but on the other hand, we've had a lot of good new spots open (and, apparently, thrive) in the face of the storm. Many of them apparently entered the market with careful menu design, offering good value at relatively affordable prices, often making the numbers work by specializing in small plates.

We've seen some high-end places rewrite their menus (is $20 the new $40?), while other high-end spots have held the line. We've seen abundant use of price-cutting attention getters like half-price wine and buy-one-get-one-free coupons. And we've heard a few tales about increasingly apparent belt-tightening in the form of shrinking portions, stingy refills and such.

I'm trying to put together a thorough, comprehensive overview of the tactics Louisville eateries have used to stay afloat in the recession ... what has worked well and what not so well. And I'm also curious to know whether restaurateurs anticipate permanent changes in approach. When good times return, will small plates and small prices stay? Or will we see a quick return to $40-plus entrees again?

Feel free to post to this topic - it could be a good one! Alternatively, folks in the business who'd rather talk confidentially on background are welcome to Email me at rgarr@louisvillehotbytes.com .

Robin,

Very thought provoking from both a consumer and a provider perspective.

Looking back over the past year I would count Becky and I among those rare individuals who can say that our restaurant expenditures have actually increased dramatically (I prove that to myself every time I look at my checkbook register). I attribute this increase to (a) moving into a new city with lots of dining choices and (b) having to work out of town on a semi-regular basis and wanting to spend "quality time"out with my wife when I do have some down time. Segueing to this year, I would anticipate our expenditures falling back to what for us are more normal levels (despite the perceived revival in the economy). Not sure what you could extrapolate out of that comment other than there are a thousand and one reasons why people do or do not dine out more often or more extravagantly and the economy is but one reason (albeit a large one).

One thing I would like to point out is that HotBytes (at least in our case) has played a very important roll in where we dine...and I'm certain we're not the only ones. For that reason alone you should be on every restaurant owners Christmas card list. I have a sense that there are a lot...a whole lot...of industry types "lurking" on this forum and while the odd restaurant my take a hit here or there due to poor service the overwhelming attitude on Hotbytes is positive and informative. I can state with no uncertainty that over the course of the year we have skipped several meals we had planned for home in favor of a meal at a restaurant that we read about on Hotbytes. I think one of the things that restaurants in general and L'ville restaurants in particular need to be cognizant of this new fangled thing called the internet. It's one thing to add your menu to a website, it's another thing to actually seek out and read what people are saying about your establishment...I'll compare it to adding another wrench to your tool box...Just another tool to help you get the job done and done right.

There ! My lone "thoughtful" post of the week. I'll now get back to my offhand somewhat humoous remarks lest I ruin my carefully crafted image as a crotchity curmudgeon.

Back to your regular programing after this message from our sponsors...

We have cut back on the number of times we eat out due to rising costs.
Having said that, we DO frequent the places noted to have "specials". It allows us to eat out while not spending as much. We have also started buying more gift certificates at a discounted rate so that we CAN continue to go out.

My only take is this - first, even before Le Relais, Avalon, and Equus rewrote their menus and offered lower options, there weren't a whole lot of $40 entrees in the city beyond the steakhouses and the very very high-end places (610 Magnolia, Oakroom) - at least, my sense is that with most of the higher-priced places (pre-menu change Equus, pre-menu change Le Relais, Jack Fry's, Volare, etc.), the average entree seemed to fall very consistently into the $26-$32 range. I find this to still be the case at 90% of the upper-end restaruants in the city, and seems to be the price-point that's been around for 6-8 years now.

That being said, the changes are appreciated, if for anything else it's exposing a new, younger group of Louisvillians to "fine-dining." Regarding small plates, I always found that to be something lacking in the city. It's a shame it took an ecomony in the depths to get places to make that move, but small plate/tapas joints were everywhere during my pre-economic collapse years in St. Louis. Like many things (and with the exception of La Bodega), it just took its time getting here. I hope it stays around, and new openings like Blue Lagoon give me hope.

Also, I will say that when Varanese first opened, it was a breath of fresh air with its price point being slightly under its competitors.

All in all, my general sense is that the economy has forced restaurant owners to re-examine their product, menu, and style. This has led some to make changes and others to decide that their product is presented and priced correctly. The positive, as I see it, is the very fact that owners are re-examining what they do, instead of becoming complacent. As with the appearance of small plates, it's a shame that it took the economy to bring some of this about, but in the end all this reflection may be a very good thing for Louisville's dining scene.

[Robin Garr]

Thanks, all. This is very helpful and thoughtful information, just as I figured we'd get here. (And Steve, thanks for the plug ... where do I send your swag? ) Brad, your note about menu price points is well taken, although I definitely had places like 610, the Oakroom and Jeff Ruby's in mind, it did seem to me that entrees ranging from the upper $20s into the lower $40s were a little more common when people still had fat 401(k)s.

Keep it coming, gang, and I do hope we can get some industry folk to speak out, at least privately to me in Email or PM although an open discussion in the open forum, I think, would win a restaurateur a lot of respect here.

Robin,

Not so much of a plug as a simple observation. If I'm a restaurant owner I'm lurking all over this forum and I'll bet the smart ones are. For the benefit of those industry lurkers It might be interesting to conduct a poll on the demographics of this forum sometime (assuming that hasn't already been done and I missed it)...As for participation on the forum by said owners, if I'm them I'm going to be verrry careful about what I post and how I post it. I think there are those, Will Crawford and (occasional poster) Chef Deano come to mind, as examples of those who have used the forum in a very positive and non-manipulative way. Not so sure others have the capacity to be so successful...and to that end I have seen posts on the forum that I perceived as somewhat above and beyond simple "P.R.".

Robin,
This has certainly been an interesting year for the restaurant industry. The economic climate has forced most people to take a closer look at their spending habits and find ways to cut back.

Here at Seviche the economic crunch has affected our business. Our response, starting last winter, was to find ways to truly let our customers know that we understand the situation and appreciate their willingness to come out and spend their hard-earned dollars with us.

One of the first things we did was introduce "Seviche Sundays", where we offer half-price food and wine. The response was incredible. Sundays now rival Friday and Saturday as one of our busiest night of the week. The first people to really take advantage of the deals were industry people. We started seeing local chefs, servers, managers, and working folk who often have Sundays off, come in and munch on seviche (priced under $10). Soon enough the idea really took off with the rest of the public and now customers pour in on Sundays. Many of them will order the discounted seviches and drink $3 margaritas, while some order their favorite bottle of wine at half the price and then purchase a more expensive entree that they wouldn’t have splurged on otherwise. We love all of these types of customers and are thankful for their patronage.

We feel as if Sundays have given us the opportunity to serve some customers that would not have otherwise given us a chance. We are happy to serve them on that day, and hope that they will be more inclined to come in on other nights as well.

We are very fortunate to have a strong and devoted group of regular customers; familiar faces that you can count on week in and week out. Some dine with us once a month, others are in several times a week. We adore these people and always try to make an effort to make them feel right at home here. We know their names, their favorite drinks and their specific orders; they are our life-blood.

Very early on in the recession, it was clear that it would be harder to attract new customers, therefore making our returning business all the more important. Anthony, being one of the most gracious hosts you could find, impressed upon us the importance of letting the people who do come in know how much we really and truly do appreciate their business. When you finish your meal here its very common to be thanked by the server, the manager and the host at the door. Often times Anthony himself walks around and personally thanks each table. It is important that they know we are grateful for their business and also their support. We want you to leave here feeling that you got your moneys worth (whatever the amount) and that the people you gave it to understand and appreciate your contribution. The money isn’t going to some corporation out of town, or a millionaire CEO. The money you spend at our independent restaurant goes to pay these faces, stock quality local and sustainable ingredients, and to make sure that we can keep the lights on so that next time you have a craving for Seviche we are here and prepared to serve you.

Chef Anthony and the staff here really consider ourselves lucky to sustain and even thrive in such a hard time for restaurants. We know that it is all because of you, whether you've been here once or a million times. Our recession strategy is to make sure you know that.

Amen, Madi. As a customer I totally understand what she is saying. And they do just what she says.

Chef Anthony and the staff here really consider ourselves lucky to sustain and even thrive in such a hard time for restaurants. We know that it is all because of you, whether you've been here once or a million times. Our recession strategy is to make sure you know that.

That same philosophy is echoed at Volare, Saffrons' and LImestone and by and large those are the restaurants that I patronize. If the restaurant seems indifferent to my patronage, I don't tend to go back.

Any good chef can make a good product (more than likely any of us could just prepare most of the meals we have out at home) but what makes a good dining experience is atmosphere.
As someone who has played in practically every place in town, what Jeff Ruby's, Jack Fry's, Volare, etc. is that they have personalities that reflect their owners.
I guess the owners can only bring the prices down so much before they have to sacrifice their original concept.

Many of them apparently entered the market with careful menu design, offering good value at relatively affordable prices, often making the numbers work by specializing in small plates.

Value is the key for me. Paying $40 for a filet has no value at all. You have to be an idiot to screw up a filet. Just cook it at home, no value in eating it in a restaurant. Sushi(food art), exotic/expensive ingredients, or special cooking techniques, that is something that has value to me in a restaurant.

Small plates - more dishes in one setting = good.

Also, I will say that when Varanese first opened, it was a breath of fresh air with its price point being slightly under its competitors.

Varanase dominates its competitors in overall value/price point. It's prices are much lower, with the most expensive dish coming in at $22 for prime rib. The quality of ingredients, service and inventiveness do not suffer due to the fair prices.

Value is the key for me. Paying $40 for a filet has no value at all. You have to be an idiot to screw up a filet. Just cook it at home, no value in eating it in a restaurant. Sushi(food art), exotic/expensive ingredients, or special cooking techniques, that is something that has value to me in a restaurant.

I agree with you totally on this, Justin.