Chowing Downscale

What savvy restaurateurs are doing to keep diners spending in penny-pinching times

Jul 1, 2009  

by Anthony A. Davis

Says Leong, 46, who bought a failing Greek pizza joint in 1991 and turned it into the always popular Melrose, “It’s important that when you bring in a menu item, say one raw ingredient, there is more than one use for it.” At one point, Melrose brought in Alaskan king crab for crab cakes, but the perishable seafood didn’t sell quickly, and there were few other uses for the high-cost item other than crab legs, a bit pricey for his clientele. Crab was dropped from the menu. A good cut of beef, however, can be used in a steak sandwich, fajitas or other dishes. And these days, Leong’s food staff shop for bargains in good quality, multi-use ingredients. They are also now looking for more locally grown produce in an effort to trim Melrose’s food costs while serving up quality produce.

Like all restaurants, the staff at Melrose wants you to add, say, a side dish of mushrooms or half-rack of ribs and finish off your entree with another drink or coffee, perhaps dessert. That’s up-selling. Beverages, especially coffee, have a high margin, compared to, say, a steak. And there’s more emphasis on this than ever, say restaurateurs. “We definitely want to up-sell. We want to complete [the customer] experience with a dessert, perhaps a cappuccino. You don’t take percentages to the bank,” shrugs Leong. “You take dollars to the bank. If you have one more extra thing, and you can bring an extra five or 10% [income], then that’s what you want to do.”

Up-selling is a delicate thing. “You don’t want to come across like a used-car salesman and push, push, push,” Leong remarks. “Some of our staff have been around a while and they do have a very good way of understanding what our guests’ needs are, reading body language, asking how their day went. That’s part of the psychology of our industry.”

Psychology may be sticking a fork in restaurant revenues more than recession realities. At Teatro, one of Calgary’s best-known white-linen restaurants, management saw the gloomy pusses on the faces of their once boom-blissful clientele and decided they’d better do something. Teatro, says assistant manager Dean Symonds, had never done much marketing before, other than dishing out a free dessert or drink to regulars. But in April, garnering it significant media coverage, the restaurant unveiled its own Economic Stimulus Plan “aimed at giving Calgarians some much-needed respite from the recession.”

The plan included a “recess” (happy hour sounded “too chicken-wing and beer,” explains Symonds) from 3 to 5 p.m. Monday to Friday, with the antipasti menu and every bottle of wine or beverage at half price. Teatro dropped the normally whopping $50 corkage fee on Sundays and now offers a daily three-course lunch for two tied to the price of a barrel of oil. Those lunches, which might include something like a rack of pork or salmon with a soup and crème brûlée dessert, started at $35 and when we spoke in May stood at $58.94. “If oil dives to 15 bucks, we’ll still do this,” says Symonds, adding Teatro was selling more lunches now at the higher price than when it was lower. Word about the unique deal is leaking out. And the 16-year-old restaurant is now seeing clientele between 3 and 5 p.m. In earlier times, the majestic Dominion Bank building Teatro occupies downtown would be empty.

At the opposite end of the price scale, multinational fast-food chains “are advertising deals at price points that seem to be great value,” says Joey’s Andy Taylor. “What they are doing is taking their lowest-food-cost items, the items they mark up the most, and sometimes they package them a little differently, take away a side dish, then trim their margin on it a little bit in order to achieve an attractive price point.” McDonald’s and Tim Hortons, he says, have done a great job of that, not to mention advertising new products such as chicken wraps that are cheap to make and sell and keep customers coming through the door.

Joey’s hasn’t done any value pricing; quite the opposite, in fact. Spooked by the revenue declines from 2005 through 2007, it is reinventing itself to meet the needs of a baby-boomer clientele now reaching the empty-nest phase. It’s getting rid of its hard chairs and bright colours, warming up the palette, installing booths, using richer fabrics and quieting the interior. Its old, stark, paper menus have been replaced with leather folders and full colour. Menu offerings have evolved from the less expensive Alaskan pollock fish and chips to higher quality – and more expensive – halibut and haddock. Though menu prices went up about the same time the Dow and TSX started plummeting, there was no pushback from customers, reports Taylor.

For the first time, Joey’s has also launched a national radio marketing campaign, spending close to $1 million. Likewise, Al Browne thinks a recession isn’t the time to cut back on advertising and marketing but, rather, the time to hone it. Advertising on television and radio is becoming easier and more affordable to get, and once-harried ad execs are now spending more time with clients to ensure they get results, he says. His Calgary Hooters restaurants, for instance, have gotten heavily involved in promoting the Calgary Flames and drawing in the hockey audience. And all his restaurants are deepening their charitable community efforts at the local level. At Melrose, Leong, who spends 3% of revenues on marketing “whether times are good or tough,” has recently turned to YouTube to try to promote his operation in a new, inexpensive way. The restaurant has posted videos of special events at Melrose, such as a performance by urban country singer Matt Masters.

Not everything restaurateurs are doing to cut costs, attract new customers, keep regulars and squeeze out profits are as visible as those efforts. At the beginning of the year, Leong spent about $50,000 on a Sani-Floor system behind his bar. The self-washing floor system, distributed in Canada by former Calgarian Brian Blakley, keeps floors cleaner, reduces slipping and features a slightly flexible anti-fatigue grated surface.

“By having that system, we’re going to have a very sanitary floor in back of our bar where typically a lot of drinks are spilt. Our staff are a lot happier because the floor actually has flex, and most of them are standing on their feet for most of an entire eight-hour shift. They get sore backs and they get sore legs.” If staff feel safer and healthier, they are going to be that much nicer to a customer at the end of a shift.

Here, Leong echoes what Browne and Taylor insist successful restaurateurs must continue to do even as they hunt ways to trim costs and cling to their already slim profits in these times: give customers a good time and value for their money. “I make sure when they come to our establishment, it’s a treat.” If food or drink portions are cut down, for instance, Leong says, “That would be a mistake. One day if you come here and you get a full glass of beer, and the next you get a pint minus two inches. That’s inconsistency. Our customers are very in tune with their money and they will notice that.”

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