As Belts Tighten, Restaurants Try to Fatten Sales
The sluggish economy is taking its toll on restaurant sales, forcing business owners to look for ways to cut costs and hold on to the customers they have, according to suppliers and analysts attending the Western Foodservice & Hospitality Expo at the Los Angeles Convention Center on Sunday.
“People are hearing about the economy,” said Bill Keldsen of Santa Monica Seafood, a fish retailer. “They’re concerned. Restaurants are one of the first areas that gets cut back on.”
More than 25,000 restaurant industry suppliers and buyers, from gourmet to fast food and cafeterias, packed the convention center for the three-day expo, many of them looking for creative ways to maintain their share of an increasingly competitive business. The exposition ends today.
Although consumer confidence is down, traffic at most restaurants hasn’t tapered off substantially, analysts say. But consumers appear to be trading down when they dine out, choosing a chicken dish instead of a pricey steak, or a hamburger instead of a fish sandwich, said Alan J. Liddle, an editor with Nation’s Restaurant News.
To keep customers, some restaurant chains such as Long Beach-based King’s Seafood, which operates the Water Grill and King’s Fish House, have allotted more of their budget to complimentary items or deleting charges for items customers find less than satisfactory.
A few high-end restaurants have even begun adopting restaurant loyalty cards similar to frequent-flier programs, which alert customers to dinner specials and earn customers points for free perks.
“In a declining economy, restaurants have to compete much harder for the business,” said Mike Wallach of Clever Ideas Inc., which runs Click, an Internet loyalty program for restaurants.
“In that environment, customer loyalty is essential.” Especially, he said, since only about 15% of a restaurant’s customers make a return trip the same year.
Also essential, restaurant analysts say, is finding ways to cut expenses now that many restaurants have seen labor and energy costs shoot up.
Reluctant to raise prices and turn off consumers, many are changing parts of their menu, coming up with new items that fetch the same price, but are cheaper to prepare, such as pasta dishes, Liddle said.
Keldsen said some establishments have begun switching to frozen fish, or buying already-prepared food products to cut down on labor.
And, at the food service convention, many attendees were at least contemplating more high-tech solutions, such as spouts for liquor bottles that let bar owners compare the amount of liquor being poured and sensors that alert managers when too much energy is being consumed by air conditioning or other appliances.
“Things are tougher so people are getting more active” and more creative, Liddle said. “People are really looking for ideas again.”
