Published in the Philadelphia Daily News April 18, 2003
FEELING HUNGRY? Restaurants are too these days.
In this slouching economy, it seems there’s a bonanza in the strategies restaurants are wielding to bring in the customers: free munchies during happy hour, “express lunches,” entertainment (DJs, bands, singers), prix-fixe meals at lower-than-usual prices, low-cost wine programs, even coupons.
Some restaurants report that business has been down as much as 30 to 35 percent from previous years.
“It doesn’t take a rocket scientist to tell business this winter was not as good as years past,” wrote Derek Davis, who presides over several Manayunk establishments, in an e-mail. “Did you know that in the last 10 years, the number of restaurants in our city has tripled? … Yes, more and more people are eating out, but has that tripled?”
To attract new customers and keep old ones, he said, “we are constantly doing new things and gradually changing with the times. They say, ‘You may be on the right track, but if you are not moving fast enough you will still get run over!”
Lately, there’s been a lot of furious movement, but whether it’s in the right direction remains to be seen. Even the old pros are having trouble keeping their restaurants in the black.
“Business is tight, but when business is tight you have to take the necessary actions to make it work,” Restaurant Row resident Georges Perrier said last month. But apparently His Georgeness wasn’t making his suburban Le Mas Perrier work, hence a recent name change to simply Le Mas — and the addition of clowns on Sundays to make it more “family friendly.”
More than anything else, though, Neil Stein’s Chapter 11 bankruptcy filing last month is Exhibit A on these troubling times for restaurants.
The wake-up call
If his fellow restaurant owners weren’t already worried about the fizzling economy, the harsh winter weather, the lack of convention business and the encroachment of large chains, Stein — who heads Striped Bass, Avenue B, Rouge and Bleu — woke them up. Stein filed for bankruptcy protection for all of his restaurants except Bleu. He plans to keep all of them operating.
“I was really surprised,” said Cary Neff of Sansom Street Oyster House. “I watch Neil. I’ve watched him for years. I sit at the bar in the Striped Bass and watch him peruse the floor. I sit at Rouge and notice him from across the way, when he sees something he doesn’t like. He’s so on top of the game. So to me, there’s no way it was anything he did or didn’t do.”
Ronald Gorodesky wasn’t surprised. But then, as president of Blue Bell’s Restaurant Advisory Services, he has the job of seeing these kinds of things coming. Among other services, his company helps wake clients up to the sad reality that the restaurant business is exactly that — a business.
“There are a couple of factors in the city that are hurting the restaurant industry,” Gorodesky said. “One is that competition has increased tremendously in the last couple of years. And two, the convention center is sucking wind and there’s no sign of its dramatically improving.”
Three, of course, is the sluggish economy in general.
Gorodesky maintains that Striped Bass (which is not a client) has probably been hurting because large chains such as Capital Grille, Smith & Wollensky and McCormick & Schmick’s have been moving into the fine-dining turf.
Then, opening Avenue B long before the Kimmel Center opened across the street was a big strain on a limited budget.
Chains typically have more leverage in getting better real estate deals and in attracting better staff, because there is room to advance in the corporate structure, Gorodesky explained. They are situated better financially to weather short-term storms.
Chains also pull customers in with special deals and promotions. However, the independents — even high-end ones — are increasingly using such ploys as well.
Even with such traffic-generating moves, Gorodesky sees more bankruptcies and closures on the horizon. He expects the “earliest possible” recovery to be in the fall.
Paying the bills
Though these are difficult times for independent restaurants in Center City — with business travel down in this just-postwar moment — “there’s always an exception,” Gorodesky said.
“When you get this small BYOB or similar place — small, chef-owned and driven, like Dmitri’s — they make money because their overhead is low, the owner is there, it’s very controlled. I really like those kinds of businesses.”
Case in point is Django, a small BYOB just off South Street that packs them in, even on Tuesday night.
“People like to go to them. There’s customer loyalty,” Gorodesky said. “They’re less vulnerable to the ebbs and flows of big business.”
For the other guys, Gorodesky advises restaurants to do what it takes. He doesn’t like coupons because “coupon clippers are loyal to the coupon company, not the restaurant.” Plus, “it creates a value system that lets the consumer know that if they don’t have a coupon, they’re paying too much.”
Still, he admits these are unusually tough times.
“If think that whatever you have to do to get cash flowing and keep the staff employed to get through a terrible economy, you have to do,” he said. “Basically, you decide to forgo profit to pay your bills.”
The bright side — for consumers
The good thing about this climate is that there are deals to be snapped up, even at high-end restaurants. Restaurants that wouldn’t normally be caught dead issuing coupons or offering other incentives have found a low-key way to do it without sacrificing their rep.
Some companies offer “gift certificates” online. You can purchase them for as much as 50 percent off the face value of ther certificate (a $50 certificate for $25).
Others are adding services such as delivery (Marathon Grill) or take-home (Jones, London Grill). Or they’re glamming up their interiors (Tangerine, Rembrandt’s, Striped Bass).
Some are trying low-price, prix-fixe meals to bring in traffic on slow days, or promising fast service (“express lunches”) at midday (Pod, Striped Bass, Lacroix).
At Sansom Street, chef-owner Neff (who once had to close a restaurant) said he’s been pretty lucky in that his prices are moderate and the menu is well-known and liked by his customers.
“But I still always have the attitude that I’m scared,” he said. “Because I read the trade magazines and you see the births and deaths every month. Nobody’s safe. Nobody’s above everything. That drives me a little bit.”
If all else fails, there’s always clowns.