Business at Juban’s Restaurant hasn’t fallen off a cliff, but Carol Juban is worried.
“After 25 years, we’ve been through some rough times like everybody else,” she says. “This is just going to be harder than it has ever been before.”
To combat these times, Juban’s has been working in some low-priced menu choices: a three-course dinner for $28 and a three-course lunch menu for $16. But even with business down, the restaurant just experienced the biggest Valentine’s Day weekend Juban can remember.
“They know they can’t do this all the time, so this is an excuse: ‘Hey, it’s Valentine’s Day. We’re going to have fun,’” she says. “On a normal weekend, when we’re slower, they’re watching their pennies.”
Restaurant spending usually is a good indicator of consumer confidence, and fine-dining restaurants like Juban’s typically feel the pinch first. But even during a recession, people don’t stop going out to eat completely, especially in south Louisiana. They’re just more picky about how much they’re willing to pay.
“Business is flat,” says Jim Funk, president of the Louisiana Restaurant Association. Before the recession, an average profit margin was 3% to 5%. Today, restaurants are doing well to break even, though fast-food restaurants are doing extremely well, he says.
Wholesale food prices shot up last year, causing some restaurants to raise their menu prices as much as 8%. But you can only raise prices so much until customers rebel, especially when they’re not as confident about their personal wealth. Instead, many restaurants are making adjustments most consumers won’t notice, says Wendy Waren, a spokeswoman for the restaurant association.
Owners are being more careful about wasting food, for example. You might see less bread, crackers or condiments on the table, or you might have to ask for things that might have been brought out without previously having to ask. Linen tablecloths and napkins are becoming less common. Some restaurants are adjusting their menus by mixing in items with a better profit margin, and some are starting to serve slightly smaller portions. What they can’t do, Funk says, is compromise on quality or service.
“If you have a bad experience on the service,” he says, “people will not overlook that.”
John Williams, director of the Lester E. Kabacoff School of Hotel, Restaurant and Tourism Administration at the University of New Orleans, says hotel, restaurant and bed and breakfast owners have been very reluctant to pass too much of their food and beverage costs to the consumer. Many businesses are sending their people away from the highest-end restaurants and hotels, he says. Casual dining is usually more stable, and fast food even more so.
“McDonald’s has done pretty well throughout,” Williams says. “People don’t want to totally discard their social life—getting out and dining—so they’re going to put some of that dollar somewhere.”
“The restaurants that are doing pretty well right now are the ones that strike a balance between price and value, be it by special promotions, prix fixe menus or loyalty programs,” says Annika Stensson of the National Restaurant Association.
Their research shows 75% of consumers would visit full-service restaurants more often if they offered discounts for frequent dining or discounts on less busy days of the week, and 69% say they would visit quick-service restaurants more often if frequent-diner discounts were offered. The national association optimistically predicts 2.5% growth in 2009, including 4% growth in the quick-service segment and 1% growth for full-service restaurants.
Al Copeland Jr., chairman of Al Copeland Investments, just completed a $1 million renovation of his Essen Lane restaurant, and he says the New Orleans-style chain is doing “pretty good” despite the national economic downturn. They have made a few adjustments, including the addition of a 14-item tasting menu of dishes that sell from $6 to $8.
Texas de Brazil, the Dallas-based churrascaria that opened a Perkins Rowe location in October, isn’t cheap by Baton Rouge standards: $43 a head for the full experience, not including tips, dessert and drinks.
But you can expect to wait up to two hours for a weekend seat if you don’t have a reservation, and General Manager Gilson De Oliveira says his restaurant is among the top producers out of 15 locations. He says many of his customers might otherwise be at Ruth’s Chris Steak House [a chain that has been struggling because of the economy and excessive debt, reports say]. Part of the appeal is the Brazilian steakhouse experience—which includes gauchos bringing various meats on skewers to your table—and part is a solid value, he says.
“Here, you know exactly how much you’re going to spend,” he says. “You can do the math yourself at home.”
Jim Urdiales owns Mestizo Louisiana Mexican Restaurant on South Acadian Thruway, a casual-dining establishment with an average entrée price of $13 to $14.
Urdiales says his numbers are holding pretty steady—he might see a slight increase this year despite a slow January—and he’s proceeding with plans to open a location in Prairieville.
“Even during a recession, people tend to eat, drink and smoke more. I’ve got margaritas,” he says with a chuckle. “I’ve just been pleased that we really haven’t taken a hit. … I still don’t think Louisiana is really in a recession.”
