San Francisco Restaurants Hit Hard by Economic Downturn

by Gopalan on Dec 9 2008 1:16 PM

Among the most visibly affected by the current economic miseries are the restaurants in the US. Customers have less to spend, and hence dishes are moving slow. Some restaurants are shutting shop.

Bay Area waiters, in San Francisco, have a nickname for many of their customers these days: the non'trée.

Non'trée (pronounced "non-tray") refers to the folks who order appetizers rather than a pricier entree - a popular practice in economic hard times. In fact, as the value of real estate plummets, the stock market totters and the jobless rate grows, diners are sharing meals, skipping dessert, opting to drown their sorrows in a glass of wine rather than ordering a whole bottle, or staying home altogether.

Not since 9/11 have these restaurants whether it be the fancy, white-tablecloth ones or the cozy neighborhood hangouts, seen such a lull in business. But this time, restaurant owners say, it's worse. Even in an area known for its obsession with food, some restaurants say revenue is down as much as 40 percent. Many are laying off workers; others reducing the days they are open. Then there are those who are just plain calling it quits.

For Curt Clingman of Jojo, a neighborhood French restaurant in Oakland that just celebrated its ninth year in business, lack of customer traffic that's killing him. When they do come in, diners tend to share a couple of starters instead of buying full meals.

"The depth and length of this economic downturn has been the worst I have ever lived through," said the chef, who owns the bistro with his wife, Mary Jo Thoresen, a pastry chef.

Clingman said that he started feeling the pain early this year, when his usual clientele began to thin out.

"We thought we could weather it," he said. "But things got nothing but worse."

During the next few months Clingman and Thoresen tried to retool the business, eventually scaling down to two dishwashers, two servers and a part-time sous chef.

"Where do you go from here?" he asked. "To persevere was becoming too reckless."

The couple has decided to shutter the place Jan. 1. They have already made a deal to sell most of the restaurant's assets and feel fortunate to have found a buyer.

For the first time in its nearly five-year existence, Michael Mina, the four-star restaurant in San Francisco's Westin St. Francis Hotel, will close two days of the week - Sunday and Monday. Chef-owner Michael Mina said those are his slowest days in an already slow economy. He said his sales fell 10 percent during September and October. Tables aren't filling up like they once did, and diners are shying away from expensive wines.

"Ten percent may not seem like a lot," Mina said. "But because the profit margin in the restaurant business is so low, it has an effect on the bottom line."

Ordinarily around the holidays, the restaurant books 20 parties larger than 17 people. This year, it has only 13 confirmed, Mina said. In the next few weeks, he said, he'll have to let some employees go.

The restaurateur, who owns 14 restaurants nationwide and in Mexico, said his resort locations are being hit the hardest. People aren't vacationing and traveling the way they used to.

Restaurant losses could be the consumer's gain. Owners, scrambling to save their businesses, are offering all kinds of deals, trying to make eating out too good to pass up.

Like Mina’s, whose bar has added 15 items, including sweets, and offers a special of three savory plates and a dessert for $55. A meal in the dining room with drinks could easily run in the hundreds.

Moderately priced restaurants such as the Left Bank Brasserie, with locations in San Jose, San Mateo, Menlo Park, Larkspur and Pleasant Hill, and Santana Row's Tanglewood, have also been hit. Richard Miyashiro, president and CEO of the chain, said sales are down about 8 percent from 2007.

Pasta Pomodoro, the Californian chain where most entrees run under $12, is feeling the pinch. "We're down a bit," said owner Adriano Paganini. "But we're not down as much as others."

Britt Brunke, the chain's marketing coordinator, said the restaurant is responding by offering a number of incentives. On Mondays, for instance, it takes 30 percent off the price of takeout orders of $30 or more. On Tuesdays at some of their locations, kids eat free with the purchase of adult entrees. The El Cerrito restaurant features an all-you-can-eat spaghetti and meatballs dinner every Thursday, and various other locations offer five pasta entrees priced at $5 each for lunch.

Later this month, management plans to introduce a $16 fixed-price menu that will include an appetizer, entree and dessert. It's a model that lots of restaurants are moving toward in hopes of luring diners.

"Maybe restaurateurs should ask for a bailout - more people in the Bay Area eat at Pasta Pomodoro than drive Fords," said Paganini.

Clark Wolf, a national restaurant consultant with offices in New York and in the Wine Country, said restaurateurs have been known to cry poverty, "but this time it's really true," adding that across the country he's seen sales down from 10 to 40 percent.

Making matters worse, he said, "restaurants have spent the year paying for fuel supplements and the rise in wheat and butter prices. While gas prices have dropped, the cost of goods hasn't.

"In these troubled times, people want to know what they're getting and how much it costs…It makes them feel in control, unlike the stock market."

Cav Wine Bar & Kitchen in San Francisco has been successful with its three-course tasting menu for $33, which it started in October. Owner Pamela Busch says it takes pressure off diners who may already feel inundated.

"If someone was to select three courses, it would cost on average about $6 more," Busch said. "It is fiscally beneficial for restaurants because we know exactly what our food cost is going to run for each person who orders the tasting menu, and that helps us gauge other aspects of our food budget."

Other San Francisco restaurants have banded together to offer deals to residents of the Bay Area's nine counties. With proof of a ZIP code, diners at restaurants including Cafe Coton, Cliff House, Colibri Mexican Bistro, Fisherman's Pizza and the InterContinental can receive a gamut of freebies, including wine, desserts and appetizers.

But don't expect discounted food at John's Grill. San Francisco's historic watering hole and restaurant is doing just fine during all the financial chaos. Owner John Konstin said business is up 8 percent from last year.

The regulars keep coming, he said. And people attending conventions, who during the good times had been taking their hefty expense accounts to Gary Danko and Chez Panisse, are going to the more moderately priced restaurants like John's.

"We just hired people," Konstin said. "We got 300 resumes for servers in one afternoon."

The restaurant also caters to European tourists, who come for a taste of its colorful San Francisco ambience with plenty of euros to blow.

"They buy their $70 wine bottles," said Konstin. "And the locals just sit and watch."

Food always gives us a feel of satiety or "satisfaction." A normal well-balanced individual human eats food for both physiological and psychological satisfaction.