Lane Cardwell

Second Verse, Same as the First

I have been talking to the gathered masses of the leadership of the restaurant industry at conferences over the past three weeks. For the most part, this is a group that gets it.  Times are tough, and old beliefs are being challenged in order to get out of this burning building unharmed. However, there is still a group of restaurateurs out there that believe that they can put their heads down, work harder, raise prices indiscriminately, and come out of this alive. Denial is not just a river in Egypt.

If you are reading this, I assume that it is not your only source of news about our industry.  Usually people who read industry blogs are some of the most informed people in any industry. They read what is written by the mainstream media, and then drill down further by reading the opinions of people who have opinions. Out of it, they form their own opinions.

Chances are you are not part of the uninformed. However, on the off chance that you work for, or are around, someone who is, let’s hum the song that has been playing throughout the chains of America for the past several months. Dylan (Bob, not his son Jakob) certainly knew what he was talking about when he wrote the lyrics to “Times They are a Changing”. While all parts of the industry are feeling pressure, the greatest pain is being felt from casual dining and upwards.

You know it, I know it, your boss knows it, Wall Street knows it, and our customers know it. This is not business as usual. When almost every retail store you go into is running big sales covering most merchandise, when the leading claim by most restaurant chains isn’t how good the food is, but how cheaply you can buy it, you can’t go about your merry way and pretend that you are immune. You aren’t.

I will not deny any business leader the chance to run their chain the way they want to, I just have no sympathy when they then complain that business is soft. If you want your restaurant to stay busy, and your employees and owners to stay happy, you don’t have the luxury of running it the way you used to. These are different times that call for a more, let’s call it what it is, desperate approach to traffic building.

The New York Times (why don’t they go pick on another industry for amusement?) wrote recently about how restaurants across the country are responding to this prolonged period of anemic traffic trends. Be warned: this is not new news. These are not new tactics or cutting edge strategies. This is a collection of what people across the country are doing differently than they used to in order to stay alive. Lack of traffic, like a lack of oxygen, has a way of clarifying the mind to what is important. Decades-old traditions, pride and ego, even a highly regarded brand statement, take a backseat to the desire to stay in business.

Here is a collection of what the Times reported from across the country:

"Even restaurants that say they’re doing fine, in Miami and elsewhere in the country, can no longer afford to play hard to get. They’ve started taking reservations and adding value menus with phrases that evoke the Depression. And many restaurants say more customers are sharing appetizers, buying cheaper wine, ordering less wine and fewer courses, or just not showing up as much."

"Restaurants that formerly banned customers from modifying menu items are playing a bit nicer and creating specials: the “Hard Times Happy Hour” just arrived at Lola’s in West Hollywood."

"BLD, popular with the Hollywood crowd, needed emergency action. Among other changes, the two-year-old restaurant started taking reservations for the first time to better manage labor costs and edited its menu so diners would order main courses, not just small plates. The changes have limited the decline in sales to about 10 percent. Others report 20 percent declines."

"Restaurants with predictable food at decent prices seem to be doing better. Bars with football fare (burgers, wings, quesadillas) report that business has stayed roughly even since last year, as do the South American cafeterias that dot most Miami neighborhoods."

"Icebox Cafe in Miami Beach, which offers New American fare, now offers a “recession cruncher” menu that includes a stuffed red pepper with a beef and rice filling for $12. The owners have also had some success with new, affordable family take-out: a loaf pan of meatloaf, with nine servings, goes for $18."

"One SixtyBlue, in Chicago, is counting on a new chef and some tweaks to its pricing to end the year on a better note. “The new menu is reflective of where the economy is going and sensitive to people’s spending needs,” the owner said. “Chicago, like New York, is looking for what’s new and exciting. We want people to think of us as more affordable on a regular basis.” Currently, diners are skipping desserts, and fewer people come in for a light dinner at the bar. Overall, sales are off by 10 to 15 percent."

What is the lesson? Be nimble, be humble, be proactive, be realistic, and be close to your customers. Happy hours, reservations, bar menus, lower prices, holding the line on pricing, prix fixe menus, reformulated menu items, two and three course meals for two, you name it, you need to put it all on the table and see what makes sense for your business and your customers. You don’t want your restaurant to be the place that reminds your customers of their favorite Halloween movie, “The Night of the Living Dead.”

In the meantime, let’s not forget the lyrics to the Dylan song that the industry is humming. The first verse is enough.

“Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon                     
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'.”

Posted by Lane Cardwell on November 2, 2008 | Comments (10)