Discretionary spending?

[Infrasonic]

So what's the general feeling about how the economic scenario is going to impact on restaurant spending over the coming months.

[chrisp]

So what's the general feeling about how the economic scenario is going to impact on restaurant spending over the coming months.

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I reckon we'll have a few closures, some welcome some not.

My tip is for Ducasse at the Dorchester to shut up shop before too long, and (unfortunately) the new Bacchus Bar & Kitchen, which has been totally empty every time I've been.

[adey73]

I've read somewhere on either the American or Pastry boards that in times of recession, sales of chocolate increase. .....Time to take on Thorntons.

[BertieWooster]

Some weird things are happening. I know Room in Manchester is now charging for bread (£2-50ish IIRC), which just seems tight amd likely to put people off. Other places (and it might be my imagination) are making much more of selling up--that extra bottle of water, or the sides. Course, things started to bite at the beginning of the year as product costs started to rise (which should ease again by the end of this).

As a mid-ranker, we've been doing fine, even slightly increasing. Maybe its the very top-end thats suffering. And I would think some of the identikit one-stars will struggle with their GP. Oh, and if GP ruled our lives before, its now a minute-by-minute concern rather than a day-by-day one.

Course, comfort food is the answer! I predict a big run on crumbles and pies.

[PhilD]

Some weird things are happening. I know Room in Manchester is now charging for bread (£2-50ish IIRC), which just seems tight amd likely to put people off. Other places (and it might be my imagination) are making much more of selling up--that extra bottle of water, or the sides. Course, things started to bite at the beginning of the year as product costs started to rise (which should ease again by the end of this).

As a mid-ranker, we've been doing fine, even slightly increasing. Maybe it's the very top-end thats suffering. And I would think some of the identikit one-stars will struggle with their GP. Oh, and if GP ruled our lives before, its now a minute-by-minute concern rather than a day-by-day one.

Course, comfort food is the answer! I predict a big run on crumbles and pies.

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I would assume punters will be focussed on value for money. All those places that deliver sub-standard food for high prices will either adjust their pricing or fail. My take is that demand exceeded supply in the UK so restaurants that charged the "market rate" for a meal i.e. £20 for a main without taking into account the value, will struggle.

I actually disagree about the top end suffering as this is "destination dining" for special occasions or frequented by those who are recession proof. My guess is that it will be in the mid-rank market where we see the most casualties, as this is where the real discretionary spending is. If I am cutting back I want to know I am getting good food well priced, I won't take as many risks as I would do if I was eating out 2 or 3 times a week (so this week it is a long trip to the walnut Tree rather than a risky local).

We went through a mini recession in Sydney post the Olympics and we saw restaurants drop their price points and reformat menus to focus on value. Those that did this well are still here. Those that didn't crashed.

The up-selling, charging for bread and sides will definitely drive people away. Simply charging more will erode the customer base more quickly, they may extract more GP per diner but it will be off a far lower base and thus be a lower GP.

Edited September 30, 2008 by PhilD (log)

[BertieWooster]

I actually disagree about the top end suffering as this is "destination dining" for special occasions or frequented by those who are recession proof. My guess is that it will be in the mid-rank market where we see the most casualties, as this is where the real discretionary spending is. If I am cutting back I want to know I am getting good food well priced, I won't take as many risks as I would do if I was eating out 2 or 3 times a week (so this week it is a long trip to the walnut Tree rather than a risky local).

Yeah, but a lot of 'destination dining' is both staggeringly expensive AND very disappointing--viz. The Waterside. I think most people would rather be mildly disappointed for less money.

Of course, this is ignoring the bit of the fine dining economy based (like contemporary art) on the essential human need to say 'you paid how much? for that?'. Call it the Reggie Perrin complex.

[nikkib]

but it is not the uber rich who will suffer - they are still happily set for life on their £22million bonuses etc, don't forsee any high ends closing to be honest - ducasse a possible exception as i dobn't know anyone who has been and enjoyed it..

[muichoi]

I actually disagree about the top end suffering as this is "destination dining" for special occasions or frequented by those who are recession proof. My guess is that it will be in the mid-rank market where we see the most casualties, as this is where the real discretionary spending is. If I am cutting back I want to know I am getting good food well priced, I won't take as many risks as I would do if I was eating out 2 or 3 times a week (so this week it is a long trip to the walnut Tree rather than a risky local).

Yeah, but a lot of 'destination dining' is both staggeringly expensive AND very disappointing--viz. The Waterside. I think most people would rather be mildly disappointed for less money.

Of course, this is ignoring the bit of the fine dining economy based (like contemporary art) on the essential human need to say 'you paid how much? for that?'. Call it the Reggie Perrin complex.

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You seem to have it in for The Waterside, a restaurant which does exactly what it says on the tin. I don't suppose they'll be too bothered though.

[BertieWooster]

*massive snip*

You seem to have it in for The Waterside, a restaurant which does exactly what it says on the tin. I don't suppose they'll be too bothered though.

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Wasn't aware the tin said 'abysmal service, terrible food.' Must have missed that.

No, I don't suppose they will.

[Infrasonic]

I can see the quality of ingredients tanking in the low to mid range as an effort to maintain GP is undertaken without putting up prices. (I discussed this in another thread with reference to the inexorable rise of the cheap all you can eat buffets in Mcr.)

YoY for Aldi,Lidl, Wetherspoons etc. is up, so it's obvious where the cost conscious money will be going.

Top end? Depends how much in cash the majority of the uber rich are I suppose. Anyone fully invested in the markets/property etc. is going to be in a lot of pain at the moment.

[ravelda]

but it is not the uber rich who will suffer - they are still happily set for life on their £22million bonuses etc, don't forsee any high ends closing to be honest - ducasse a possible exception as i dobn't know anyone who has been and enjoyed it..

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I tend to agree - the top end tends not to be too affected as there are still going to be wealthy diners who are relatively un-scathed by what is going on and still have bags of cash to spend on luxury items and there will still be people wanting to celebrate or go out for a special meal. Historically it has been the mid-market that loose out as people choose to go to the cheaper pub type restaurant in place of the mid-priced restaurant and will continue to go to top end places on special occasions that they have saved up for. Sure they may go a bit less than they would have in the past to expensive restaurants and may spend a bit less on wine, but none the less the middle is most at risk.

[naebody]

At the risk of stating the obvious, restaurants close all the time. Most of them close because they're shite. Natural selection will accelerate as punters grow fewer in number and thinner in wallet, but I doubt the process will make extinct anywhere you'd eat twice by choice.

Anyone want to start a dead pool? Without much thought at all, my ten would be: Texture, Bel Canto, Kyashii, Just St James's, Brian Turner, Shed, Cocoon, Shanghai Blues, Mint Leaf Lounge and Cape Town Fish Market.

Edit: damn. I forgot Dans Le Noir. And L Restaurant. And Edera. And ... well, all of these basically.

Edited October 1, 2008 by naebody (log)

[erica graham]

Anyone want to start a dead pool? Without much thought at all, my ten would be: Texture, Bel Canto, Kyashii, Just St James's, Brian Turner, Shed, Cocoon, Shanghai Blues, Mint Leaf Lounge and Cape Town Fish Market.

Edit: damn. I forgot Dans Le Noir. And L Restaurant. And Edera. And ... well, all of these basically.

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Please don't wish people to lose their jobs - well not that many people. (can't be good karma)

[PhilD]

Brian Turner

I thought it had closed already - I stayed in Grosvenor Square in August and they were re-formating the restaurant - new name, new decor etc.

[Gary Marshall]

Anyone want to start a dead pool? Without much thought at all, my ten would be:  Bel Canto,

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reading jan's review this morning i can certainly see why.

[naebody]

Please don't wish people to lose their jobs - well not that many people. (can't be good karma)

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Oh spare me. The dead pool isn't to wish ill on a place, just as you would be an asshole to want Abe Vigoda dead but unwise to exclude his name in your celeb reaperlist.

(... which isn't to suggest there's absolutely no malice involved. I'd guess that, for the first time in a decade or so, there will be more London restaurants close this year than open. This is a necessary cull. And while I extend my sympathy for all those six-thumbed Polish waitresses and recovering alcoholic plongeurs who will have to find other employment, the bankers going into hock for the reflected kudos of owning a nonsense like Kyashii and Helene Darroze deserve everything they're about to get.)

Edited October 2, 2008 by naebody (log)

[ravelda]

At the risk of stating the obvious, restaurants close all the time. Most of them close because they're shite. Natural selection will accelerate as punters grow fewer in number and thinner in wallet, but I doubt the process will make extinct anywhere you'd eat twice by choice.

Anyone want to start a dead pool? Without much thought at all, my ten would be: Texture, Bel Canto, Kyashii, Just St James's, Brian Turner, Shed, Cocoon, Shanghai Blues, Mint Leaf Lounge and Cape Town Fish Market.

Edit: damn. I forgot Dans Le Noir. And L Restaurant. And Edera. And ... well, all of these basically.

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So naebody, you think that all those restaurants doing special offes will go bust? Including places like pearl?!

[chrisp]

At the risk of stating the obvious, restaurants close all the time. Most of them close because they're shite. Natural selection will accelerate as punters grow fewer in number and thinner in wallet, but I doubt the process will make extinct anywhere you'd eat twice by choice.

Anyone want to start a dead pool? Without much thought at all, my ten would be: Texture, Bel Canto, Kyashii, Just St James's, Brian Turner, Shed, Cocoon, Shanghai Blues, Mint Leaf Lounge and Cape Town Fish Market.

Edit: damn. I forgot Dans Le Noir. And L Restaurant. And Edera. And ... well, all of these basically.

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So naebody, you think that all those restaurants doing special offes will go bust? Including places like pearl?!

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I bloody well hope not - I've got Pearl booked for my birthday next month.

[naebody]

So naebody, you think that all those restaurants doing special offes will go bust? 

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Yup.

Including places like pearl?!

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Yup.

[PhilD]

Including places like pearl?!

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Yup.

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Hotel restaurant economics are different from high street restaurant economics.

The Renaissance Hotel "needs" a good restaurant to position as a luxury hotel, and as one of Marriott's premium brands it needs a quality restaurant to differentiate itself from others brands in the group. Thus I suspect Pearl is safe.

[ravelda]

Including places like pearl?!

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Yup.

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Hotel restaurant economics are different from high street restaurant economics.

The Renaissance Hotel "needs" a good restaurant to position as a luxury hotel, and as one of Marriott's premium brands it needs a quality restaurant to differentiate itself from others brands in the group. Thus I suspect Pearl is safe.

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I have to say Naebody, I think you are faily off the mark here. A number of very solid restaurants have special offers on the toptable site and use it as a marketing tool. In my opinion to use that as a barometer for likely candidates is just not credible. We for instance have always used the site for bookings - we do limit the number we take on our offers but it generates a lot of business. This year has certainly been a little tougher than last year (mainly over the summer), but so far and god willing for some time to come, the business remains robust, we are full most evenings and at lunch pretty much in line with past years, sure the wine spend from some people is a little lower than before as they are having there expense accounts shaved back, but we, like I am sure many of the other restaurants on toptable doing offers, have a lot of loyal customers who will continue coming and spending. Those restaurants that fail will largely be those that out-price themselves by charging more than is credible and under-delivering.

[naebody]

Sorry - there should be a clear method to mark hyperbole on messageboards.

I didn't mean to suggest (or rather, I didn't mean to be taken literally that) anywhere needing a website deal to fill seats is going to go under. There are plenty of special situations on that list.

However ...

I'm also of the opinion that we've not even started to see the effects of the economic recession on the real economy. And I'm afraid the restaurant industry is a mere champagne cork that's about to be launched into this particular ocean.

In short, I'd fear for any business that couldn't service debt on half its current turnover. I'd fear for any business that's already felt it necessary to put prices up substantially, or to take them down. I'd fear for anywhere that's spawned a branch within the last 18 months. And, needless to say, I'd fear for any business run by an absentee-landlord that has expanded into Zone Two hotels using finance from an Icelandic bank and a backstop loan from a Scottish one.

(Phil, you are right to observe that a posh hotel in High Holburn requires a place like Pearl. My concern centres on how long Marriott will require a posh hotel in High Holburn.)

[Infrasonic]

^^^ Along the same lines I wonder how Ramsay is feeling at the moment.

I wouldn't want to be in the hole to a PE firm right now.

[ravelda]

Sorry - there should be a clear method to mark hyperbole on messageboards.

I didn't mean to suggest (or rather, I didn't mean to be taken literally that) anywhere needing a website deal to fill seats is going to go under. There are plenty of special situations on that list.

However ...

I'm also of the opinion that we've not even started to see the effects of the economic recession on the real economy. And I'm afraid the restaurant industry is a mere champagne cork that's about to be launched into this particular ocean.

In short, I'd fear for any business that couldn't service debt on half its current turnover. I'd fear for any business that's already felt it necessary to put prices up substantially, or to take them down. I'd fear for anywhere that's spawned a branch within the last 18 months. And, needless to say, I'd fear for any business run by an absentee-landlord that has expanded into Zone Two hotels using finance from an Icelandic bank and a backstop loan from a Scottish one.

(Phil, you are right to observe that a posh hotel in High Holburn requires a place like Pearl. My concern centres on how long Marriott will require a posh hotel in High Holburn.)

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Ah - now that makes much more sense! I think you have a very good point here, there certainly is likely to be a lot of closures, not least new openings that have high rents, a lot of competition and no solid loyal customer base. It is certainly very interesting and difficult times!

[Paul Reynard]

Fairly interesting article on the subject:

http://www.bloomberg.com/apps/news?pid=206...columnist_vines