Restaurant promotions: assisted suicide
Loss-leading menus, inexperienced temporary servers, and deal-seeking diners who are unlikely to return: Week-long dining deals are a recipe for restaurants to fail.
Ronald Holden
Ronald Holden
They've been known by several names: "25 for $25," "30 for $30," and "New Urban Eats." Now these promotional events are called Dine Around and Restaurant Week, and the current edition of Seattle Restaurant Week runs through Oct. 28, excluding Friday and Saturday nights. Restaurants promote themselves with three-course meals — $15 for lunch, $25 for dinner — in hopes of luring new customers to their stores.
But restaurants aren't grocery stores, which have a long history of loss-leader weekly specials; they're more like small manufacturing businesses, and it's a mistake to think they recover the costs of money-losing promotions.
It's bad math for a restaurant owner to think he can make up the cost of these promotions by doing more business (the argument that "we lose $10 on every widget we make, but we make it up on volume") or by acquiring new customers (assuming patrons return when prices return to normal). And it's wrong for customers to wait until prices drop (often by half) to visit a new restaurant.
For the current promotion, each participating restaurant contributes $750 to a nonprofit association, Seattle Restaurant Cooperative, which purchases advertising. Of the 106 restaurants that participated in the promotion last spring, 97 percent reported an increase in revenue, according to spokeswoman Heather Jensvold, and the number of participants this time around has risen to 126. (An earlier version of this story erroneously reported that the cost was "nearly $1,000" and that the money was paid directly to The Seattle Times.)
Still, many regular customers flee their favorite haunts during these promotions. Some, no doubt, take off for the competition's cheap meals; the rest don't want to be anywhere near the relative chaos of Restaurant Week and its ilk.
Menus get more complicated (because the restaurants want to put their best feet forward), service is less polished (because the servers have less training on the temporary menus, or have been hired just for the week). Not many restaurants are equipped to handle a nightly influx of double the number of regular guests. The newby guests, furthermore, tend to be lousy tippers (perhaps in response to lousy service, perhaps because they have no intention of ever returning).
Assume for a minute, though, that all goes well — that a small, neighborhood mom & pop gets through the 10-day "week" with 500 customers, twice as many as usual. Whatever the restaurant's normal average check (let's say $50), it's going to be less during the promotion. Some higher-ticket restaurants face a drop of $20 per customer during Restaurant Week.
No restaurant owners would speak for attribution, but many face the approach of promotional weeks with the excitement of Opening Night and the dread of a trip to the dentist. Yes, promotional events put "butts in seats" (as the saying goes), yes they help fill "excess capacity." But restaurant seats are not like empty spots on the "Ride the Duck" tour bus; it costs money to cook and serve meals to each additional customer.
Many restaurant cooks approach Restaurant Week promotions with their customary macho swagger and competitiveness. They've got to produce a three-course menu for the standard 35 percent ingredient cost or they're in deep trouble. And the menus themselves are public knowledge, published on The Seattle Times' website. "My $8-food-cost menu is going to blow you away," they say to their rivals down the street. You look at the dishes, and you know somebody's not being entirely truthful; there's no way you can put that much food on a plate for $8.
Assaggio, maybe. At dinner ($8 ingredient cost): a salad, some braised pork shoulder, gelato; at lunch ($5 ingredient cost) soup, pasta, panna cotta. But Rover's? At dinner: smoked salmon, Pacific cod with lobster mushrooms, espresso crème brûlée for $8? Impossible. Fine, you say, owner Thierry Rautureau spends more on ingredients. And I say, either he's got to make it up somewhere else or he's willing to lose $5 a plate (or maybe much more) in the name of bringing in new customers.
And assuming that's true, I have two more questions for restaurant owners: Why in the world would you turn your back on your regulars, who support you and your elegant, high-priced dinners year-round, for the purpose of bringing in dozens of bargain-hunting cheapskates who would never pay your everyday prices? (If General Motors sold Cadillacs for $5,000 for one week a year, why would you buy a Cadillac when it's not on sale?) Why, in other words, are you training your customers to pay half price? Promotions like Restaurant Week are self-inflicted poison, slow suicide. If I go to a participating restaurant during the promotion, I'm abetting the suicide.
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Comments:
Posted Tue, Oct 19, 7:46 a.m. Inappropriate
Nice analysis of restaurant week Ronald. I did notice that you left a major cost out of the equation that we're trying to highlight. 90% of restaurants that participate in restaurant week use Open Table. Each of those reservations cost the restaurant $1 per cover. So that's an additional $500 fee associated with the event. I work for Reservation Genie and we recently released a tool called a Free Tracking Link that allows our clients to put an Online Reservations link on websites like Restaurant Week and book without cover fees. It still reports where the traffic came from, so they can measure their results. It just doesn't incur cover fees. They can also use that link on Yelp, City Search, Facebook, Twitter, etc...all without incurring cover fees.
Posted Tue, Oct 19, 10:25 a.m. Inappropriate
I find this article disturbing on so many levels; it lacks vision and critical thinking. As a participant in restaurant week I must say that it is a tremendous success! We increase our covers by 50%, have a menu that is easy to manage AND see new faces. This is in no way a jab at our regular customers we treat it as customer appreciation week while gaining new customers. While I have always paid closer to $1,000 to participate in restaurant week I have paid 5 times that advertising in magazines, newspapers, etc. without seeing near the new faces. As a diner restaurant week is just as great I have had the pleasure of visiting New York and Chicago during restaurant week and now plan visits around the event.
I’m not sure why you feel the need to degrade an event that requires so much hard work and that the masses seem enjoy.
Can you name another time where people will go and try new restaurants and dine out on average of 3 times per week, I can’t and I’ve been in this business for 15 years. For us it is a marketing expense and a damn good one. Restaurant week creates a buzz and gets people excited to dine out and they should be excited most of us create menus that are fabulous, fun and affordable!
Posted Wed, Oct 20, 11:18 a.m. Inappropriate
Interesting perspective, realfoodie. I was very curious why the author wrote this entire piece ripping on restaurant owners, yet (apparently) never interviewed a single one of them, relying instead on uninformed opinion.
Posted Thu, Oct 21, 10:02 a.m. Inappropriate
I owe Mr. Holden an apology.
I am one of those people who looks forward to Restaurant Week every year. I see it as an opportunity to eat out more often, to try new restaurants and to visit different parts of the city.
But I had no idea that my bad-tipping, cheap-skate ilk and the chaos we cause was such a terrible burden on Mr, Holden and the other real restaurant-goers of our fine city. I'm sorry that our presence offends him so greatly that he is not only put off his food, but is forced to flee in terror!
Be strong Ron! It'll only be a few more days! In the meantime, I hope you've stocked up on enough canned goods and freeze-dried meals to see you through this mini-apocalypse!
Posted Fri, Oct 22, 9:25 a.m. Inappropriate
I read this drivel awhile back and moved on as the bile rose in my throat.
Today I looked to see what other wrote and I could not agree more with:
realfoodie's- "I find this article disturbing on so many levels; it lacks vision and critical thinking... I’m not sure why you feel the need to degrade an event that requires so much hard work and that the masses seem enjoy."
sgo73 in its brilliant entirety!
Crosscut, you can do better!
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