Hungry for Bargains : As More Diners Demand Discounts, Restaurants Are Scrambling to Offer Deals

With celebrity customers, a plush interior and preservative-free food, Luma restaurant in Santa Monica was expected to be a hot spot for trendy free-spenders when it opened a year ago--a place to see and be seen, much like the successful Luma in New York City.

But Luma is now in vogue for a very different reason: It has launched a frequent-diner program that offers free meals to regular customers. The promotion, which augments Luma’s new lower-priced lunch and dinner specials, is one of the latest signs of the burgeoning bargain-hunting consumerism that is reshaping the restaurant industry.

“Recent economic troubles have changed consumer attitudes,” said Eric Stapelman, owner of Luma. “Even people with lots of money are spending less. When it comes to eating out, people are demanding a good dollar value. We’re just catering to this demand.”

Increasingly, “value” is on the menu in the form of price cuts, bonus meals or jumbo portions. More restaurateurs are also participating in dining club programs that offer discounts or two-for-one deals.

“Frequent-purchase deals, discount combo-hamburger meals, big-big-big pizzas--the industry understands that value is extremely important right now,” said Wendy Webster, spokeswoman for the Washington-based National Restaurant Assn. “Now more expensive sit-down restaurants are on the value kick. We’ve never seen anything like this kind of value-consciousness among diners.”

To be sure, the industry is responding to the growing public appetite for value--a craving for less-expensive quality and for quantity. The trend has escalated from the drive-through franchises to haute cuisine , reaching restaurant operators that rarely engaged in promotions.

For example, the ritzy L’Escoffier at the Beverly Hilton in Beverly Hills recently reduced its buffet prices on Monday--dubbing it “value night”--and introduced a value-priced five-course meal called “Menu Gastronomique.” Solana Beach, Calif.-based Chart House, which has 65 restaurants in 22 states, this month launched a frequent-diner program that offers customers free meals and free travel in exchange for their patronage.

The industry is turning to promotions because restaurants have been forced to keep prices down in the face of weak consumer spending. Restaurant operators need more customer

traffic because their thin profit margins are narrowing even further. Nationally, restaurant prices rose an average of 2% in 1992, the lowest increase since 1964. On average, restaurant prices are expected to be up only 3% for 1993, according to the National Restaurant Assn.

Lower prices and mega-portions are luring reluctant customers such as Lou Cutell, an Angeleno who rarely patronizes restaurants.

“I don’t like to eat out, because I like my cooking and I don’t like restaurant pricing,” said Cutell, an actor who favors Italian cuisine. “How can a restaurant charge $15 for pasta when a box of pasta costs $1.10?”

While some established eateries are adopting promotions, some companies are creating new restaurants designed specifically for consumers who want more food for less money. WDI, a Tokyo-based restaurant firm in Japan, financed the July opening of Itameshi-Ya on Melrose Avenue in Los Angeles. Itameshi-ya is a generic term for a category of Japanese restaurants that serve large portions of Italian-style cuisine at low prices.

Itameshi-Ya’s grilled and pasta dishes were priced between $10 and $20 when it opened, but the restaurant this month lowered prices in a bid for more customers.

Los Angeles-based attorney Lee Mockery was lured to Itameshi-Ya by the promise of larger portions. She is critical of nouvelle cuisine because the artistically presented dishes are sometimes skimpy with their portions.

“It’s important to find a restaurant that understands the importance of value and large portions,” said Mockery, who dines out frequently for business. “I don’t like situations where my client leaves a restaurant hungry.”

Many nouvelle cuisine restaurants around the country have closed, and some are abandoning that format in favor of simpler and heftier offerings, said Ron Paul, a Chicago-based restaurant analyst and consultant.

“Convenience and value are the biggest factors in the industry today,” he said.

Indeed, Southland eateries with reputations for big portions--such as Pacific Palisades’ Gladstones 4 Fish, Marina del Rey’s Aunt Kizzy’s Back Porch and the rapidly expanding Irvine-based Claim Jumper restaurants--are benefiting from the trend. For example, Claim Jumper, which recently opened its 11th restaurant, plans two more Southland openings next year. Gladstones recently opened a location at Universal CityWalk, and the family that owns Aunt Kizzy’s recently opened Dulan’s restaurant in Los Angeles.

On the other hand, some local eateries are just beginning to offer extra value to meet the competition of national chains. Responding to the food fight that pits Pizza Hut and its “Bigfoot” pie against Domino’s “Dominator,” the Buena Park-based La Pizza Loca chain recently introduced its “La Gigante” pizza.

Nationally, value-oriented offerings have revived sagging sales in certain food categories. “Combo meals”--hamburgers served with fries and a large drink for less than the a la carte price--are common at fast-food restaurants such as McDonald’s and Hardee’s and have halted a decline in hamburger sales, according to the National Restaurant Assn. After falling for three years, orders of large hamburgers at restaurants nationwide increased 6% and orders of large cheeseburgers increased 14% in 1992.

Burger King this month upped the ante by lowering its prices and promoting “everyday” values. Meanwhile, Taco Bell, which hasn’t raised prices in three years, plans to launch a new premium-sized product in November.

“I’m not allowed to describe it,” spokeswoman Janis Smith said. “But it’s huge.”

While big chains fight for the casual-dining value market, a growing number of more formal restaurants are trying to gain customers by joining discount dining programs.

For example, Transmedia Network, a New York-based company that offers members a 25% discount on meals at participating restaurants, will open operations in Los Angeles in November and plans to establish the program in Texas, Georgia, Arizona and Missouri in 1994.

Transmedia now has discount dining programs in San Francisco, Chicago and much of the East Coast. In all, 2,300 dining establishments participate in the program by accepting a contract under which they receive an advance payment from Transmedia based on its estimates of the amount of business its members will generate. The program is adding 200 restaurants a month, and Business Week magazine recently cited Transmedia as one of the most promising companies in the nation. The Premier Dining Club is also attracting more participating restaurants as its consumer membership expands. Participating restaurants offer two-for-one deals and other discounts to card-carrying Premier members.

“Restaurants tend to join our program when they need more business,” said Patricia Flynn, vice president of Premier Dining. “More restaurants are interested in our program because consumers are very cautious with their money.”

Premier Dining had 100,000 members and 300 participating restaurants when it was acquired three years ago by CUC International, a firm that offers a variety of discount retailing memberships. Premier now has 1 million members and about 9,000 restaurants.

Norman and Betty Ruttenberg, a retired Corona del Mar couple, were settling for fewer meals out until Betty recently obtained a Premier card.

“The atmosphere has changed,” she said. “I see more people taking leftover food home--that’s a sign. It’s fashionable to be frugal. We’re not penny-pinching. We want our money’s worth.”

Restaurant Price Hikes

More restaurants are offering discounts, holding the line on prices or launching promotions to lure value-oriented consumers. On average, restaurants prices in 1992 rose 2%, the smallest increase since 1964.

Average national price increase Source: Labor Department