In tough times, restaurants try to keep customers comingWhile restaurants across the nation are watching their profits shrink, some in Duluth are remaining hopeful a fruitful summer and fall will carry over into the winter months.
By: Patrick Garmoe, Duluth News Tribune
While restaurants across the nation are watching their profits shrink, some in Duluth are remaining hopeful a fruitful summer and fall will carry over into the winter months.
Tom Hanson, owner of the Duluth Grill, said his company’s net sales this year are probably up 7 percent over last year.
“It’s holding up,” Hanson said, but he’s not taking his customers for granted. “We’re out to protect every single guest right now.”
Five major restaurant chains have filed for bankruptcy protection this year compared to two chains during all of 2007, according to Technomic, a Chicago-based food industry research and consulting company. The casualties this year include S&A Restaurant Corp., which closed all of its company-owned Bennigan’s restaurants, including two in the Twin Cities.
Some customers are going to cheaper restaurants, and others are picking up prepared meals at grocery stores. In the 1990-91 recession, restaurants collectively lost 4 percent of food-market share to grocery stores, said Brian Moore, an analyst at Wedbush Morgan Securities. Moore figures that in this cycle they’ve lost about 2 percent, “and there is more to go.”
To keep his Duluth Grill customers coming, Hanson has restarted specials on some meals, while nixing a 56-cent special on second meals on Mondays, because food price spikes earlier this year ate up the profit margin.
Hanson believes while many might switch from upscale restaurants to moderately priced ones, he doubts the economic downturn will mean a mass exodus of customers from restaurants like his, which serves moderately priced meals.
Hanson said doing extras like baking 18,000 holiday cookies last year — a feat they hope to repeat this year — helps boost the bottom line as well.
He also has cut garbage costs by recycling more and has cut energy costs by turning equipment on and off on a schedule during the day.
Brian Daugherty, president of the Grandma’s Restaurant Co., said his company’s nine restaurants also benefited from a strong summer and fall this year. As the economy weakens, his company is dropping prices more often on some favorites.
Chicken tetrazzini and grilled steak kabobs at Grandma’s will go on sale more often at $7.99 instead of the regular $12.49, for instance. To attract more people into the upscale Bellisio’s Italian Restaurant & Wine Bar’s periodic five-course wine dinners, the restaurant will slash the price from $95 or more per seat to a one-time $65 per-person special, Daugherty said.
“People are going to start looking for more values … in their dollar in the next three to six months,” Daugherty said. “I want to tell them that you can still get more for your money at my locations.”
The Los Angeles Times contributed to this report.