The retail sector isn’t alone when it comes to feeling the strain of the economy. So are restaurants. This is a bad year for fashionistas and foodies alike! (Skinny and not well dressed is a lethal combo). In an interesting article in today’s Washington Post, restaurant owners around the country are trying to contend with a double economic whammy that has hit the industry, shaking up menus and causing chefs to consider, among other things, the merits of foie gras (not foie gras!).
Food costs are soaring. It’s hard to make a profit on a gourmet pizza when flour prices are up 87%. Diners are ordering less or staying home altogether, as their wallets feel lighter.
"If these conditions don’t change, I don’t see any light," said Carmine Marzano, the owner of D.C. restaurant Luigino,whose restaurant filed for Chapter 11 bankruptcy protection. "We’ve got to find a way to get through this."
Restaurant owners are taking creative, sometimes painful, steps to keep customers. In some restaurants, filet mignon is off the menu. It’s just simply too expensive an option for owners and diners. Hostesses get sent home early. Managers seat guests and answer the phones.
The restaurant business is lean even in good times. Profit margins are typically around 4%, so it’s easy to understand that when food costs go up, restaurants are squeezed even tighter. The obvious option is raising menu prices, but many restaurants owners won’t because they fear nobody will come.
Can they do enough or are the economic head winds too strong? Mintel International Group, a market research firm, said a January survey showed that 54% of people who dine out regularly are eating out less because of the economy. Of those cutting back, 70% are saving money by fewer visits overall rather than by picking more inexpensive entrees and restaurants.
Man, this stinks.
Read "Economy Raises the Heat in the Kitchen" here
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