The headline in The Press Democrat, a Santa Rosa, California, sister – paper to the New York Times, read: Restaurants, high-end retailers feeling pinch. Another time a headline like that hit the papers, especially with quotes within the story from the Wall Street Journal was in 1991. You may or may not remember that year. President Bush, (41), was in the White House. The economy was sliding. We were at war with Iraq. The Mall of America was opening soon and the economy was tanking.
And, although we hate to face the music as the dance is ending, we may be in for the same type of slow, lingering, economic downturn again. The trade papers are confirming that restaurant sales are softening.
Many of the upscale casual-dining venues, P.F. Chang´s China Bistro, Applebee´s International, and the Cheesecake Factory have put investors on warning that sales are slowing down. Having experienced a rocket ship ride to the heavenly gates of over expansion, many of the gut busting chains are finding themselves scratching there heads as they are suddenly experiencing flat same-store sales ass they cannibalize their own markets.
But wasn´t this bound to happen? Of course it was. The question is, how do you continue to attract customers who are beginning to watch the dollars they once threw around like wrapped penny candy in a parade?
The answer may not be simple, but it does exist.
A few years back I was at a party in San Francisco and I was discussing restaurants with a very affluent couple. We were talking about dining out. The gentleman told me that he disliked going out during the middle of the week because he could not justify spending $50.00 for two people to eat on a Tuesday night. Yet, he would go out if he could get by for a more reasonable price.
In the very next breathe he told me he had just returned form a New York trip where his wife bought a beautiful candle- for $400.00. As a restaurant owner, who immediately wished I had become a candle maker, I was amused at the comments and the analogy I concluded from it.
Although the culinary and candle arts have few things in common, they do share something that is very important. You may be able to buy a candle for $400.00, but you can also find one for 99 cents. And, although it doesn´t offer the same creative comforts as the more expense molded wax, it certainly offers flame and light.
With the economic downturn being predicted enough so that it may just happen, now may be the time to become pro-active and analyze your menu selections.
There is nothing wrong with offering items that are less expensive than you have offered in the past. Entrees in the $18.00- $23.00 range are very acceptable to weekend diners, however, as the financial screws tighten, and the choice between going out and staying home is made at the prepared food counters of local supermarkets, you will see your mid- week customer count decrease. This may already be apparent.
According to the Wall Street forecasts, Whole Foods is already feeling the crunch. And, as that continues to happen to the neighborhood food giant we will see their prepared food items begin to decrease in price in order to attract customers who do not want to spend a more money dining out.
The solution is to shore up the customer base that you currently have. Introduce more cost friendly entrees. Create menu items that are in the $13.00- $16.00 range. Revert back to the pastas that exited the menu when the boom hit. Put a great burger on at a reasonable price to attract that Tuesday night couple from down the street. And, don´t think that the Chicken that Costco is selling for $4.99 is not your competition. Of course it is. It´s food. It´s warm. And, it is reasonable.
Remember the birth of Boston Market? It happened during the 90´s when things were not as economically strong as we would have hoped. With the birth of the M Mansion in every suburb in America, with rising energy costs for both cars and homes, and with the telltale headlines that everything is in economic disarray begin preparing for the slowdown before it begins to affect you. By expanding your menu with low cost items you will continue to appeal to customers that have made you their weekly "favorite spot" and, you may even expand your customer base.
Remember, when planning a menu it isn´t the cost of the menu item that matters, it´s the margin of profit you see from that item.
Be create, experiment, increase customer service values and the slowdown the big guys are experiencing could be your gain.