Serving up sweet deals at local restaurants
At 3 p.m. on a weekday afternoon in Skylark’s Hidden Café, most of the tables are neatly set with sparkling water goblets, gleaming silverware and linen napkins, but they are also mostly empty.
In the background, above the dull chatter of one table and the restaurant’s jazzy background music, the caustic sound of coin after coin being counted into a till signals that a waiter is being sent home.
“It’s always slow around 3 o’ clock, but if we weren’t in a downturn right now, I’d find him something else to do until we seat more tables instead of sending him home,” said Don White, Skylark’s owner. ”A good rule of thumb for us right now is that it is probably going to be slower, not faster.”
While most local restaurateurs will say Bellingham is a bit insulated from national economic highs and lows, many will also confess that their numbers have been going down.
Anthony Anton, executive director of the Washington Restaurant Association, said while some areas have been hit harder than others, nearly all restaurants are seeing a shift in consumer attitudes.
“It’s a challenging market right now and restaurants are seeing a change in the level of what consumers are willing to spend on a meal,” Anton said.
While Anton said it is too early to have a lot of hard data on this subject, he said owners are being more aggressive in advertising happy hours and specials, as well as dropping prices and promoting low-cost, high-profit items.
“We are seeing items that were $22 are now down to $18,” Anton said. “Rather than promote the prime rib, the flat-iron steak is on special — instead of lobster bisque, it’s chicken noodle.”
White said that at his restaurant, customers are being more price-conscious with their orders.
“Some of the extras are disappearing such as that second glass of wine or some of the dessert orders,” White said. “We see them getting fewer high-end items and more low-end items. For instance, people who might have had a steak six months ago now will maybe have pasta instead.”
White, who has been in the restaurant industry for more than 30 years, said he has seen his share of recessions and knows what goes down, must come back up.
“It does pass, but you can’t underestimate what even a small loss can do to your bottom line at the end of the year,” White said. “You have to immediately take action and not lose faith.”
White said that around October and November he decided the economy wasn’t going to get better anytime soon. So he began looking around the business community to see who was thriving amid the downturn.
He said he found that profits for national low-cost, general merchandise retailers, such as Wal-Mart and McDonald’s, were up. So, inspired to offer more affordable items, White came up with what he calls “The Budget Bailout Menu,” a lunch and dinner menu that offers cheaper fare apart from Skylark’s regular menu.
“I have been trying to change people’s attitudes about what it is going to cost them to come out to a full-service restaurant,” White said.
While the promotion is still new, White said there is already a buzz about it.
“The customers are talking about it and I’ve had several people tell me I’m a genius,” White said.
For the Budget Bailout dinner menu, White said he deliberately chose comfort food-style items reminiscent of childhood, such as meat loaf, fried chicken and spaghetti and meatballs.
“I wanted items that would tug at the heart strings that way and have things people were really familiar with,” White said.
White said he hopes that creating a great value will attract business even in a recession.
“If it’s a good value for their money and people enjoy what they are getting, they will come back,” White said.
Eating into profits
As traffic at restaurants decreases, profits are on the menu.
Anton from the Washington Restaurant Association said most restaurants follow a basic formula: 36 percent labor costs, 30 percent food cost, 30 percent goes to everything else, and 4 percent profit to keep the restaurant alive.
“Most of that is overhead and that is not going away,” Anton said. “So if sales go down, your overhead is just eating more into your profits and that can make things tough.”
Ken Bothman, co-owner of La Fiamma Wood Fire Pizza, said business has been flat for the first time in years.
“We have noticed that business doesn’t seem to be growing,” Bothman said. “It hasn’t dropped off significantly, but we have had a growth pattern for the past several years.”
Bothman said the national focus on the economy and the election really affected business.
“It doesn’t take that many people to fill up a restaurant,” Bothman said. “So it means something when we have a history of being full all the time and then we start not being full — something is going on.”
However, Bothman said that La Fiamma isn’t quite as vulnerable because of its moderate pricing. He said that in tight times, people who were spending more could spend less at this restaurant, but those that spend less will keep coming in because they don’t want to compromise quality.
“If I have a limited amount of money and I am going to spend some—I want something good,” Bothman said.
While La Fiamma may be less vulnerable, Bothman said he still lowered the prices on a few menu items that are cheaper for him to make, such as cheese pizzas.
“It’s just giving people a bit of a break and sharing the pain a little bit,” Bothman said.
Rallying the brand
For some restaurants, discounts and specials are not the answer. Instead, some restaurants see hard times as time to return to the basics of hospitality and food service.
Anton said that many restaurants need to remember that it is ultimately the hospitality and dining experience that will bring customers back.
“(Restaurant owners) should focus on making sure servers remember people’s names and their favorite item,” Anton said. “Many places forget why they have been so successful.”
Constantine Papadakis, general manager of Dirty Dan Harris Restaurant, said that despite noticeable decreases in guest traffic in November and December, his restaurant had its best year ever in 2008.
“We haven’t promoted special dinners, discounted our products, substituted inferior products to save costs, or even increased our marketing dollars spent,” Papadakis said.
The secret, Papadakis said, was to rally around the Dirty Dan Harris brand.
“We circled the wagons and made every attempt to shore up systems, increase efficiencies and deliver customer satisfaction,” Papadakis said. “Guests should always feel like their dollar was well spent. We make mistakes here and there, but the core focus is letting our guests know we appreciate their business and we genuinely want them to experience our food, service, atmosphere and culture.”
Papadakis said his restaurant has an “early fare” menu and a happy hour that have not seen remarkable demand thus far, so deals and discounts are not their strategy.
“If we manage the brand effectively, we won’t see our margins slip,” Papadakis said.
White from Skylark’s agrees that confidence in a restaurant’s brand and products is essential to success in hard times.
“In the restaurant industry, there are lots of naysayers, but you are either going to really believe in what you’ve got or you may as well get out of it,” White said. “You have to take stock, evaluate yourself and if you like what you’ve got—go for it!”