Destination Designation – Not Performing in Economic Downturn
Many high end food operations previously positioning themselves as “destination” restaurants are getting hit hard in this recession. Almost every segment of the food service world has been affected in one way or another, but double digit declines for the special occasion operations are the norm. The same store sales decline is on top of last year’s price increases.
The lesson is one for the restaurant industry. The high profile chefs, celebrity owners and notable expensive dining options have set themselves up for immediate long term declines in sales and traffic count. People either can’t afford luxuries or are cutting back as fear of the unknown economic stability continues to reign. The wealthy are eating differently, just like everyone else. The moderate income households who used to go to destination restaurants for anniversaries, birthdays and holidays are scaling back and settling for more casual and less expensive restaurants.
The question is, can you be both? The answer is unclear, but many high end operators are scrambling to find ways to offer less pricey options without hurting their brand forever. Many are implementing a separate bar menu that offers everything from “gourmet” mini-burgers, flatbread pizzas, fresh fish tacos and even nacho platters. Many of the offerings are copies of what neighborhood bistros have been dishing out for years. A little splash of truffle oil and fresh morel mushroom pizzas may not satisfy or meet the customer’s expectations.
Value is the issue. Can you take a sports bar’s nachos and change the chips to homemade blue corn tortillas with barbecued sirloin and Maytag blue cheese compare when you double the price? Time will tell as the downturn continues. It is highly doubtful the consumer will fall for this pretense and even less likely the high-end chefs can control their urge to change their ways to appeal to the masses.
One thing is certain. More destination restaurants will try to downscale a part of their operation on a long term basis in the future. They will try to level out the public perceptions as our industry faces challenges like the past year and the 9-11 disaster a few years ago. Pricey dining is clearly a luxury people quickly forego when money becomes tight and the economy’s future is unclear. In a few months we will have the answer from the consumer’s response.
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