Upscale Eateries in O.C. Feeling Bite of Recession : Restaurants: For many, cutbacks and creative approaches to finer dining are a must to stay in business.
These are grim times for the radicchio and chevre set.
As the recession grinds on, Orange County’s upscale restaurants and trendy eateries are feeling the crush--and none more than the white tablecloth gang.
“Our volume in 1991 was off by 6% for the year--and I consider myself very, very fortunate,” said Hans Prager, manager of the Ritz in Newport Beach.
The Ritz’s premier competitor, Rex of Newport Beach, where Gold Coast big spenders kept vintage wines in personal lockers and danced on black granite floors, shut its doors last weekend. Owner Rex Chandler also gave up his 21 Oceanfront luxury seafood restaurant across from Newport Pier.
The restaurant will continue to be run by the landlord, Richard E. Lawrence, a retired restaurateur who returned from living in New Zealand a week ago to revive the floundering restaurant. Lawrence plans to keep going with the same chef, some staff from the defunct Rex, and new verve. “I hope the economy treats everyone better than it has, and I think it will,” he said.
On Balboa Peninsula, the Magic Island theater-restaurant has also closed, though its owners promised to reopen elsewhere in the county later this year. The Italianate Zeppa in Fashion Island, where Anthony Kennedy Shriver had hosted a $75-a-head fund-raiser six months earlier, closed “for remodeling” in June. It never reopened. On Friday, employees of Matteo’s in Corona del Mar said their lunch service would end after 21 years.
True, only a handful of restaurants have waved their white napkins and surrendered. But plenty are taking drastic steps to stay afloat.
John Dominis, a Hawaiian seafood restaurant with a panoramic view of Newport Bay and an average bill of $50 per person, was forced to close its 280-seat upstairs dining room a year ago, said general manager George Kookootsedes. It also renegotiated with its bankers and landlord, squeezed suppliers for better terms, and laid off 20% of its workers, cutting costs by nearly 32%, he said.
“You’ve got to tighten your belt to stay in business,” Kookootsedes said.
Some fine restaurants have slashed prices or added less pricey fare. Others have tried to hold customers with better food, more solicitous service, or fine wines by the glass for diners who do not want to spring for a whole bottle.
“It’s going to get worse before it gets better,” said Russell Armstrong, owner of Trees in Corona del Mar. Trees introduced eight entrees for less than $10 shortly after the August, 1990, invasion of Kuwait, and has increased neither its prices nor employee wages since.
Trees’ customer volume increased 10% last year, with an average bill of $23 to $25 per person, but its sales remained flat compared to 1990, Armstrong said. He has been able to keep prices down in part because after eight years in business, he has paid off his loans. Restaurants that borrowed heavily in the high-interest days are not weathering the recession as well, he said, predicting that “1992 is going to be a year of big shakeouts in this industry.”
“There’s a lot of restaurants out there that have managed to hang on that will no doubt run out of gas this year,” Armstrong said.
Other local restaurateurs and industry sources offered a full menu of woe. For appetizers, they blamed Uncle Sam’s limits on tax-deductible business entertainment. Then came the Gulf War, and the recession’s second dip, triggering widespread cutbacks in corporate expense accounts which were not matched by a reduction in such prix fixe items as food, rent and labor.
Banks, leery of restaurant loans in the best of times, have been loath to extend credit in a souring economy. And while consumers continue to dine out often, they are drinking less and demanding more for their money.
“Before, they would order a $40 or $50 bottle of wine,” said Bruno Serato of the White House Restaurant in Anaheim. “Now they order a $25 to $30 bottle.”
“It took a while longer (for the recession) to hit California, but it’s hit much harder than other places,” said David Wilhelm, owner of five upscale restaurants, including Bistro 201 and Zuni Grill in Irvine. “The guys who are really getting clobbered are the upper-end people.”
Never mind the recession. Never mind lunch checks averaging $18 to $22 per person. Bistro 201 business increased 15% last year, Wilhelm said. His lunch customers Friday said the food is the reason why. While they stood waiting for tables, more takeout orders came humming in by fax.
In a clever piece of marketing, the Bistro’s “Fax Box Lunch Menu” has a category called “Recession Relief”--gourmet sandwiches for $4.95. The grilled eggplant, fontina and vegetables on focaccia bread and the tuna salad on brioche with tomato and basil are hardly Depression fare, and the $4.95 also includes garlic potato chips and lemonade.
Several well-dressed customers said they are still willing to spring for a meal that is sublime--but not as frequently as they did a year ago.
“Three months ago, I decided I wanted more money in my savings account,” said Janet Bearden, a direct mail executive. “I like to have a good meal when I go out, but I just don’t go out as often.”
Across the country, customer traffic at fancy restaurants, known in the trade as “white tablecloths,” declined 6% in 1990, while at casual restaurants traffic rose 6%, according to the New York-based Restaurant Business Magazine. Editor Scott Allmendinger said the forecast is for more of the same.
“Conspicuous consumption” is out, Allmendinger said. “Sustenance dining” is in.
“What’s going to impress people in fine dining in the ‘90s is not how high can you pile the foie gras or the lobster, but how interesting is the food?” he said.
Restaurant glut is also taking its toll, Allmendinger said. During the latter half of the 1980s, new restaurants were opening at a rate of 4% per year, while the population grew only 1% a year, he said. By 1989, there were 28% fewer people per restaurant than in 1979--a statistic that keeps restaurateurs on their toes.
“We cannot afford to have any complaints whatsoever about either food or service,” said Antonio Cagnolo, maestro of Antonello Ristorante in Costa Mesa and partner in three other chic Italian eateries. “If they are not happy, they don’t pay. It’s as simple as that.”
Antonello slashed its prices by 10% to 15% seven months ago, and business swelled 11% for the year, Cagnolo said. “Before, you were making a dollar profit, now you’re only making 50 cents, but you can keep your door open and you can keep a smile on your face,” he said.
But owners said the Christmas season was hearty, and they expect the nation’s economic appetite to improve by spring.
“It is a presidential election year, and historically this country has shown an amazing ability to snap back in those years--so maybe we’ll all get lucky,” Armstrong said.
John Dominis is thinking about launching a new restaurant in its vacant upstairs dining room. Wilhelm, who already owns five restaurants, plans to open two more this year.
“Right now is probably the best time to negotiate a real estate deal than there’s been in the last 10 years,” Wilhelm said. “There are restaurants closing every month. . . . Now is a good time to be expanding if you’re got the money to invest.”
