This Recession is Hard to Swallow

Meat isn’t the only thing that’s tough in the restaurant business, an industry that reflects societal confidence – we can afford to splurge a little bit, because we are relatively certain about tomorrow. When restaurants suffer, it’s more than a business sector that is experiencing a downturn or a small local entrepreneur losing a livelihood; it’s a statement to ourselves that reflects a loss of hope. Yeah, folks can say “recovery” all day long and point to the recent “growth” statistics, but reality for most Americans is very different.

When our futures look bleak, and cutbacks are the rule; perhaps we can still indulge the gentle pleasure of an inexpensive treat, a pint of Häagen Dazs, but we look for patterns where costs drop fast… luxury clothing, a distant vacation or a once routine trip to a nice, not even super-expensive, eatery. A cold beer can ease the pain and not cost an arm or a leg, and a chomp on a candy bar may be a poor substitute for the neighborhood cheesecake special, but it is a substitute. For the struggling small business-owners, bereft of credit and light on customers, it is a slow agonizing death of a thousand cuts. A waiter’s tips drop by a third, and his or her expenditure trickle into belt-tightening in the swath of other small businesses than he or she can no longer afford.

By my own culinary estimates, Los Angeles is one of the best restaurant cities on earth. Deep in ethnic diversity (we are the second largest Korean city on earth!), we have thousands of inexpensive but wonderful places to eat. From the $7 meal-in-a-bowl of Vietnamese Phở (pronounced “fuh”) to $12 all-you-can-eat dim sum extravaganzas in one of three Chinatowns or crispy tacos or melt-in-your mouth burritos from East LA, we’re lucky to have such choice. The upscale restaurants, movie-star laden bistros and chi chi “hot spots,” well… the whole sector isn’t doing so well. The story travels across American, from Seattle to Chicago, from Cleveland to Atlanta, from Boston to New York. It’s easier to get a reservation at all but the most exclusive restaurants, but restaurant owners and their employees are not having a good time.

‘Twas the season to be going to office parties, bashes at the best, parties at the posh and dining at the decadent… except not this past Christmas. The Los Angeles Times and consumer-tracking company, NPD Group, took a closer look at the restaurant scene, all reflected in an article in the November 23^rd edition of the Times. Local restaurants are offered loyalty discounts, special packages, overall discounts and major price reductions for larger groups. Still, business is really down, all across the country. “‘It is not a pretty picture,’ said Bonnie Riggs, a restaurant industry analyst with NPD in Chicago. ‘Consumers have pulled back so much.’ In 33 years of tracking restaurant traffic, NPD ‘has never seen this type of a weakness for this long of a period,’ Riggs said. ‘The industry really has its work cut out for it.’” The number of people going to restaurants has dropped for four consecutive quarters.

The entire spectrum of genuine, sit-down restaurants is hurting: “It isn't only mid-priced family restaurants that people are avoiding. Upscale chains such as McCormick & Schmick's, the seafood house, and Morton's, the steak purveyor, saw same-store sales, or sales at restaurants open at least a year, fall 18.8% and 16.8%, respectively, in the third quarter compared with a year earlier, according to Bellwether Food Group, a food industry consulting firm… Bellwether doesn't project an industry rebound to pre- recession levels until 2012. The recession has taught consumers to eat out less often and to order less -- skipping alcoholic beverages, appetizers and desserts -- when they do, Bellwether said…”

“Christmas-season spending at bars and restaurants this year [was] about $7.8 billion, according to IbisWorld Inc., a market analysis firm in Santa Monica. That's one of the rosier industry estimates -- up almost 6% from [2008], but that's only because last Christmas was so lousy, the company said. It is still down 11% from the pre-recession level of $8.8 billion in 2007… ‘I think it will only get tougher. People are still losing their jobs, credit is still tight, and we could see another wave of foreclosures,’ said Erik Oberholtzer, co-owner of Tender Greens, a group of three restaurants based in Culver City[, California] that emphasizes locally grown food.”

Lots of restaurants have gone, you should pardon the expression, belly up, but the once-too-proud-to-market chi chi eateries are giving way to pragmatic marketing efforts. The notion of getting customers in the door, at an affordable price, was the idea behind “restaurant week” in many major cities. It’s even being done in the home city of the Wall Street piglets: “‘Restaurants definitely didn’t like participating in Restaurant Week in the past. But in the recession we need it,’ said Eric Hara, executive chef at the Oak Room at the Plaza Hotel. ‘Before, no one did it for dinner. We would never even consider doing it for dinner. But as the recession came into play, dinner came into play.’” January 20^th DNAinfo.com.

The stock market may be up (well, higher than it was after the crash), companies have jacked up their earnings by obliterating costs (by cutting lots of jobs, thus reducing America’s buying power proportionately), and with the dollar falling, folks are stuffing their mattresses with stocks, but they sure aren’t stuffing their faces at the neighborhood dinner. When restaurant business returns to “normal” in America, then, and only then, will anyone convince me that the “recovery” we have all been promised will really have taken hold.

I’m Peter Dekom, and I’ve gotten to be a whole lot better cook of late. Oooops, gotta go out to the movies tonight. Wonder what NetFlix choice my wife made this week?