Top Priorities: R&I's Top 100 Independent Restaurants
Despite high-volume sales, operators in R&I's Top 100 are feeling the pinch like everyone else. Here's what they are doing about it.
By Kelly Smith Killian, Editor-in-Chief -- Restaurants & Institutions, April 1, 2009
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Restaurant operators talking about current business conditions often use percentages to indicate how much traffic or sales are down. To the ear of an industry outsider, 5% may not sound especially grim or alarming; yesterday’s 100 customers are today’s 95.
Deno Roumanidakis, general manager of Bob Chinn’s in Wheeling, Ill., gives new meaning to such numbers, however. “We were down 5% [in sales] last year,” says Roumanidakis. “To us, that’s a $1.2 million difference. That’s a lot.”
Down is down, whether a restaurant grosses $2 million or $20 million. And though it might seem that the sting would be less for those high-volume restaurants on R&I’s Top 100 Independents list, a small-percentage dip for the giants quickly translates to millions in lost revenue.
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| SkyCity at the Needle offers deals for diners who come for the view. |
Much of the industry is taking a hit, and though the blow may be cushioned for independent restaurants situated in tourist-heavy areas, these operations are hardly immune. Across the board, operators and industry observers say customers are trading down and spending their dining dollars differently. “People are having a glass of wine instead of a bottle or sharing an appetizer or dessert,” says Andrew Rigie, director of operations for the National Restaurant Association’s Greater New York City chapter.
Raising prices is not the easiest option when consumers are watching their going-out budgets more closely. Faced with fewer tourists and corporate diners, many independent eateries find themselves taking measures they’ve never needed to before—unabashedly offering discounts, actively courting loyal customers and reversing long-standing dress codes in an effort to bring more diners through their doors.
Value Added
“We are seeing a lot of different deals, [in hopes that] the consumer will feel comfortable to eat out more often,” says Rigie. Perhaps the biggest surprise, he says, has been the number of larger fine-dining restaurants offering specials.
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| The wine cellar offers a distinctive private dining option at '21’ Club. |
New York City’s legendary '21’ Club is one such restaurant luring diners with generous offers and discounts. Recently, this theater-district institution, where limos used to line the street outside, began offering up to six hours of free parking to all dinner guests. Previously, the amenity was available only for pre-theater guests who had dinner reservations for 6:30 p.m. or earlier. “We’re no different than anybody else,” says general manager Bryan McGuire. “Regular clients are coming in a little bit less. Between Broadway [closing shows] and decreasing travel in general, all of these things tend to keep business down.”
This year, '21’ Club also took full advantage of the city’s annual Restaurant Week. Though participating restaurants are asked to offer two or three choices for each course on their special $35 three-course menus, '21 Club’ offered four. It also added a selection of $7-a-glass wines. “We looked upon it as a marketing opportunity as much as it was a way to fill seats and put revenues in the coffers,” says McGuire.
Traffic isn’t the problem at SkyCity restaurant. Each year, more than 1 million people pass by the front door of the restaurant, located atop Seattle’s Space Needle, on their way to the observation deck. To capitalize on that potential and entice people to stop by for a bite and a beverage, SkyCity recently began offering a deal bundled with the main attraction. Its “Pick Two” promotion lets tourists apply the price of their sky-deck tickets toward their meal by inviting them to choose two items (such as a glass of wine and a dessert or two appetizers) from a special menu. “We’re very conscious that people are looking for value,” says Ron Sevart, president and CEO of Space Needle LLC.
Private Practice
Private dining equals big business at many Top 100 restaurants. And several are more willing than ever to strike a deal when it comes to custom events. “We don’t walk into a conversation with a client with a number in mind,” says Michael Desiderio, chief operating officer of Tavern on the Green in New York City. “We really try to walk in with an open mind and mold the party based on somebody’s budget.” The trick, of course, is working with smaller-than-normal budgets while still delivering the quality of product that attracted the client to the restaurant in the first place. “If [a client’s] budget is $70 a person, then I want to give the best party I can for $70,” says Desiderio. “I’m not willing to compromise [on] the quality or ambience of the restaurant or on the brand, because the ultimate goal is to expand the brand.”
Last year, Angus Barn in Raleigh, N.C., increased its private-dining capacity by more than 400 with the construction of a new lakeside pavilion for weddings, corporate picnics and other special events. “We had a lot of people ask us through the years if we could do groups of over 200 people,” says owner Van Eure.
Work on the pavilion began before the economy started to slide, and Eure at one point considered scrapping the project. She ultimately decided to follow through, completing the outdoor structure last spring. “That’s what ended up making the difference for us in this economy,” says Eure.
Angus Barn also opened a second wine cellar, this one a private dining room inside the restaurant with seating for 34 people. To introduce the new space to the local community, the restaurant recently began hosting monthly cooking classes led by Executive Chef Walter Royal inside the cellar.
Everyday People
With fewer visitors flying into town, many restaurants are ramping up their efforts to connect with and draw in more local guests. '21’ Club got a good deal of attention recently when it switched from a long-standing “ties required” policy at dinner to “ties preferred” (ties have not been required at lunch since 1996). “It had nothing to do with the economy at the time,” says McGuire. “But we are seeing an uptick of younger people coming in because of it, which was a hope, but we weren’t banking on it. We just hope that will continue.”
The recent rise of the “staycation” phenomenon (taking in the attractions of one’s own city rather than traveling) demonstrates that more locals are looking for a memorable experience from the restaurant down the road. “We’re doing the same thing that we do with our transient guests for our local guests,” says David Walzog, executive chef at SW Steakhouse in Las Vegas. In particular, SW’s front-of-house staff is reaching out to build relationships with Vegas-area customers, learning and remembering their tastes and dining preferences and using that information to deliver personal service every time they return. “We made it a point six, eight, ten months ago, knowing that there could be a diminution of sales, to have a really good handle on the local environment as well, and that bolsters [things],” says Walzog.
Other operators are driving membership in customer loyalty programs to attract regulars. People who sign up for Bob Chinn’s VIP e-mail list, started last December, get 10% off their next visit as well as a $25 gift card to use on their birthday. Additionally, they receive a free dessert and a box of chocolates when they celebrate their anniversary at the restaurant. General manager Roumandakis uses the information from the list to send out e-mail blasts about special promotions. In the four months since the restaurant began collecting e-mail addresses, Bob Chinn’s database has grown to 20,000 names.
SkyCity also notes that it is paying extra attention to its Celebration Club members. Those who sign up for the restaurant’s free loyalty program receive discounts for birthdays and anniversaries as well as other special deals throughout the year. “If in the prior year we did a promotion to our Celebration Club [members] once a quarter, now it’s every six weeks,” says Sevart.
Back to Basics
To offer pricing discounts and other value perks to customers, operators must manage costs from the outset. “I put forth challenges for the team at the restaurant,” says Tavern on the Green’s Desiderio. “We’ve written a more-creative menu with food costs in mind, and we’ve worked really hard to try to control our labor.” At Tavern, that means running with five serving teams in the dining room when they can, where normally there may have been seven. Says Desiderio, “You get back to what I like to say is 'Restaurant 101,’ where it’s [all about] cost of product, the labor to put the product on the plate and then [figuring out how to] give the best price to the client while not compromising service or quality of product in any way.”
The strategies are sound, regardless of a restaurant’s size or locale. “What we’re seeing is here to stay for a while,” says '21’ Club’s McGuire. “You have to take steps to run as lean and mean as you can, and you can’t take anything for granted. If you do a good job marketing and promoting value in your own backyard and [beyond] your backyard and can hang in there and weather the storm, you should have a nice foundation to build on; when things get really good, you’re going to do nicely.
Contact writer at kelly.killian@reedbusiness.com
Seeing Green
In the 26 years that R&I has compiled the Top 100 Independents, New York City’s Tavern on the Green has consistently held a spot at or near the top. Now there is a chance that the iconic landmark overlooking Sheep Meadow in Central Park will soon have new management and a new name.
The New York City Parks Department is fielding proposals from bidders interested in taking over the location when the 25-year operating license expires on Dec. 31. Among them are Fourth Wall Restaurants’ Alan Stillman, founder of Smith & Wollensky and owner of the concept’s flagship New York City location, and Union Square Hospitality Group’s Danny Meyer, who has city-park experience in the Shake Shack unit located in Madison Square Park.
Tavern’s current proprieter, Jennifer LeRoy, hopes to retain the space. Regardless, she owns rights to the name—leading many to wonder what Central Park would be without Tavern on the Green. Michael Desiderio, the restaurant’s chief operating officer, remains optimistic. “I think we’ve done a tremendous job running this operation,” he says. “It’s clearly acknowledged by our peers and by the sheer volume of what we do. And I’d like to do it for another 20 years.”
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