In this economy, people are scrimping and saving. While this is good practice for those low on cash and resources, it can be detrimental to the restaurant industry. More and more people have cut dining out from their budget plans, giving the already unforgiving restaurant industry and even more dismal forecast.
According to 5 Point Capital’s research however, not all restaurants, however, are failing. The Cheesecake Factory announced last week that it will be presenting at the Barclays Capital Retail and Restaurants Conference while P.F. Chang’s revealed plans to open 34 more of their franchise Chinese food restaurants abroad. As this Entrepreneur.com article pointed out, “nobody likes to cook three meals a day, seven days a week—no matter how bad the economy gets.” The trick is working with the economy and making the most of a bad situation. Restaurant owners and investors need to realize that this is not a time when the Average Joe is willing to splurge. This leaves you with two options: either stop catering to the Average Joe, or make him feel comfortable with his spending.
High-end restaurants do not rely on the masses for profit; they rely on a very small group of wealthy patrons and exorbitantly high food prices. If you currently own a struggling restaurant, turning your family-run pizza place into the next Alain Ducasse may not be the best idea. Instead, 5 Point Capital recommends the second option, what we like to call the “Sound Splurge.”
There is a reason that restaurant chains such as The Cheesecake Factory and P.F. Chang’s are doing so well. They offer reasonable prices for decent menus. People who are trying to save cannot afford high-end prices, but they also don’t want to waste money on food that isn’t worth it. The Average Joe is not walking around saying “I refuse to spend money,” he is saying “if I spend money, it better be on something good.”
The US News and World Report calls the type of fare that survives in a down-economy “fast-casual.” This refers to mostly quick-service restaurant chains that offer hearty, healthy, affordable meals. Diners get the bang for their buck with good-sized portions, so they don’t feel cheated out of their money, but dining out doesn’t require setting aside two months salary.
So if your restaurant is struggling or you have plans to open a new restaurant or chain, you do not have to panic. Yes, times are bad, but there are ways to keep your business thriving. Try to get into the mindset of the average American, trying to save money but still live life at the same time, and cater to that idea as best you can. Healthy, casual, hearty meals are both appealing and non-threatening and will keep customers coming back for reliable, affordable service. Five Point Capital can help you save costs by offering affordable leasing options for restaurant furniture and equipment, so don’t be afraid to pursue or continue your restaurant dreams. Bon appétit.
Tags: 5 point capital, 5pointcapital, alain ducasse, average joe, cheesecake factory, down economy, five point capital, fivepointcapital, p.f. chang's, restaurants, us news and world report
