Restaurateurs Face Higher Costs, Fewer Diners

[Joe H]

In my industry business has slowed down dramatically just in the past several months. Generally, I sell construction projects which can have a lead time of one to three years or more. Yet, in this environment financing is much more difficult to come by and for the companies who have already received financial commitments, many of them are taking a wait and see approach to the coming season. I'm wondering if the restaurant industry is seeing significant slowdowns? My guess is, yes. I'm also guessing that this all started about two or three months ago.

Last week I was in Germany (Munich, Cologne, Hamburg and Italy (Verona, Milan) for eight days. Hotels were empty yet many German factories are running near capacity.

For those who are interested this is the greatest real estate bubble on earth:

http://www.cbsnews.com/stories/2007/10/12/...753_page3.shtml

"It's easy to laugh about it now. The palm island project sold out in less than a week, and houses that initially went for $1 million are being resold by original investors and real estate speculators for five times that. But the day 60 Minutes went ashore, a month after the official opening, the island was a ghost town.

"People just started moving in," Sultan Bin Sulayem explains."

_______________________

I have friends who live in Dubai and tell me that Palm Island has no one living there. 100% speculation. Also, the vast majority of condos are coming on line right now, almost all speculation.

_______________________

[DonRocks]

In my industry business has slowed down dramatically just in the past several months. Generally, I sell construction projects which can have a lead time of one to three years or more. Yet, in this environment financing is much more difficult to come by and for the companies who have already received financial commitments, many of them are taking a wait and see approach to the coming season. I'm wondering if the restaurant industry is seeing significant slowdowns? My guess is, yes. I'm also guessing that this all started about two or three months ago.

Last week I was in Germany (Munich, Cologne, Hamburg and Italy (Verona, Milan) for eight days. Hotels were empty yet many German factories are running near capacity.

The wine auction market has taken a hit in recent months. Although I've never done any "studies," cursory glances make me think prices for many "bubble wines" (and I don't mean Champagne) are down 30-50% since the end of 2007. Supply has begun to exceed demand in a big way - everyone rushed to sell their wines as the market prices soared. Acker, for example, is now sending out HUGE brochures in the mail for their internet auctions, which are as big or bigger than their live auctions have been in the past.

Then again, anyone who has tried to fly, or book a hotel room, or buy gasoline, knows very well that not all prices have collapsed. Travel, even domestic travel, seems more expensive now than I can ever remember it being. Prices will fall - they'll have to - but when?

Cheers,

Rocks.

[Joe H]

I paid less for my hotel rooms in the six cities I stayed in (i.e. Marriott, Hyatt, Kempinski, etc.) than I have in the ten + years I've done this trip. Car rental was less. Premium was E 1.51 a litre with diesel topping E 1.50/litre in Hamburg. Food is dramatically more expensive in Germany and Italy right now-in Euros before even factoring in the dollar. Americans are not travelling on either pleasure or business to Europe and while hotels are attempting to compensate with lower room rates, other expenses are horrendously expensive. My guess is that if I had stayed at European chains or smaller hotels I would have found a different experience; the American chains are hurting. The number of people in bars, restaurants and lobbies confirmed this for me.

Still, I visited Dal Forno and they had twelve palettes filled with wine for shipment: two to the U. S., two to Russia, one to India, two to China, one to South African, two to Japan and I forget the last two. They told me that five or six years ago two thirds would have been coming to the U. S. Today, it does not matter-they can still sell it elsewhere as can most of the upper end Italian winemakers. They said it is only the middle and lower end that are hurting.

The over riding feeling I got from this trip (and a trip to Nice in January for a week) is that American no longer matters as much to the rest of the world. China, India, Dubai, Europe-we have taken a backseat to all. Munich was crammed with shoppers on the day I was in town. Yet the American wine that I saw littered store shelves-there was no apparent run to buy it and take advantage of the cheap dollar. Rather, I had the feeling that many simply no longer want to "buy" American.

The American airlines flying me to Europe are charging more than they ever have; they've also raised the minimum fare for an upgrade.

[Poivrot Farci]

gasoline

Commercial fishermen screwed by rising diesel fuel costs:

Maine

Rhode Island

Long Island

DelMarVa

Florida

Ireland

Scotland

France

Israel

Iraq

Vietnam

[Joe H]

Commercial fishermen screwed by rising diesel fuel costs:

Maine

Rhode Island

Long Island

DelMarVa

Florida

Ireland

Scotland

France

Israel

Iraq

Vietnam

why is diesel, excepting parts of Hamburg where it is over E1.50/litre, a relative bargain in much of Europe vs. here? Consistently diesel is 15 cents a litre lower than gas, often in the high 1.25 range even now. In America I believe that truckers have a legitimate point with diesel toppin US $4.00 A GALLON, often 50+ cents a gallon higher than premium. I did pay US $9.25 a gallon for gas in Germany and earlier in England. In America I look at suburban "fleets" of Suburbans, Yukons and other three digit tank fulls that are nonexistent in EUROPE. My BMW 6 speed 500 series diesel was a gift in Germany. I appreciated the equivalent of 26 to 27 mpg on the autobahn along with diesel. I wonder how many people at Hertz would bitch at a similar car here-or who could even drive it here? American excess is over; the Escalade, Navigator and Excursion are arrogant statements of indulgent excess that few can continue to afford. Triple digit "top offs" have a way of bitch slapping one back to street reality.

[JPW]

why is diesel, excepting parts of Hamburg where it is over E1.50/litre, a relative bargain in much of Europe vs. here? Consistently diesel is 15 cents a litre lower than gas, often in the high 1.25 range even now. In America I believe that truckers have a legitimate point with diesel toppin US $4.00 A GALLON, often 50+ cents a gallon higher than premium. I did pay US $9.25 a gallon for gas in Germany and earlier in England. In America I look at suburban "fleets" of Suburbans, Yukons and other three digit tank fulls that are nonexistent in EUROPE. My BMW 6 speed 500 series diesel was a gift in Germany. I appreciated the equivalent of 26 to 27 mpg on the autobahn along with diesel. I wonder how many people at Hertz would bitch at a similar car here-or who could even drive it here? American excess is over; the Escalade, Navigator and Excursion are arrogant statements of indulgent excess that few can continue to afford. Triple digit "top offs" have a way of bitch slapping one back to street reality.

Diesel tax in germany .20 Euro lower per liter than unleaded tax. Federal tax and most states in US diesel tax higher than unleaded tax.

[Al Dente]

American excess is over; the Escalade, Navigator and Excursion are arrogant statements of indulgent excess that few can continue to afford. Triple digit "top offs" have a way of bitch slapping one back to street reality.

Well put!

Definition of irony: A "Support Our Troops" ribbon on a Hummer.

To bring it back to food (or the lack thereof):

It's only gonna get worse...

[Joe H]

Well put!

Definition of irony: A "Support Our Troops" ribbon on a Hummer.

To bring it back to food (or the lack thereof):

It's only gonna get worse...

There is very real inflation for food, groceries, Costco, restaurants, autobahn rest areas, autostrade rest areas in Europe just as here. I am coparing Euro to Euro, not even factoring in the U. S. dollar which this morning is $1.62.

...yesterday I noted that Reggiano was $20.99 a pound at Harris Teeter.

[DonRocks]

[Everyone please be mindful not to disintegrate into political discussion. Thank you! ]

[jigones]

Based on the exchange rates, expect all imported products to double in price in the coming months....cheeses, wine, etc. Time to try your local products. The effect of the exchange rate takes some time to work through the system, but it will..... People will have to think about spending money before they do. Also, I expect wheat products to significantly increase in price.

[qwertyy]

It's only gonna get worse...

This is no joke, and I'm glad it's finally starting to garner some attention. Increased fuel and commodity prices don't just make our gas and grocery bills more expensive. In Sudan, WFP's largest program, it has cost 20 percent more this year--almost $100 million--to provide the same amount of food as last year. And the bulk of these recipients, including 2.2 million people living in Darfur's camps, have no other options than the dole. In poor countries around the world, households who buy off the market historically commit around 80 percent of their income to food, leaving very little tolerance for these insane price spikes that have no end in sight. Famine and famine's long-term reverberations of vastly decreased education, health, and economic growth among the world's poorest are very real possibilities.

ETA: Can I suck all the fun out of a good economics discussion or what?

[Joe H]

How many pension systems in the United States are dependent on an 8% model to meet their obligations? How many, unable to realize this because of the Fed's continued lowering of rates are forced into riskier investments? At some point (i.e. now) it is no longer a running joke or a topic for talk shows. GE today said that after the middle of March (i.e. Bear Stearns) they were unable to sell off any fixed assets because financing for the buyers was essentially unavailable.

I did Graduate work in part on the effect of the Depression on my industry. Reading magazines, newspapers, documents in the late '20's through the early '30's is not that different from today. the similarity in tones, in fear of what might lay ahead in many instances is remarkably similar.

On a more positive note the markets are 15+% higher today than the summer of '06. Either we have at least that far to fall or all of this is an enormous overreaction. I believe the former.

The pension funds will be the next hammer to drop...then Dubai where over 30% of the construction cranes in the world are presently at work.

[Al Dente]

Food Costs Skyrocket, Riots Ensue

I gotta believe ethanol is a huge factor in all this. Those subsidies MUST go.

[qwertyy]

Food Costs Skyrocket, Riots Ensue

I gotta believe ethanol is a huge factor in all this. Those subsidies MUST go.

It absolutely is a big factor, but equally painful is the cost of fossil fuels. Since the United States, which funds WFP by half every year, requires that its food donations be purchased in America, the soaring gas prices make just transporting millions of metric tons of grain/sorghum/rice/oil from here to [insert poor country in other hemisphere] shockingly more expensive than it was a year ago. Even just transporting commodities from the farm to the market overland within a country is now bumping the price more than can reasonably be borne by poor families.

[mdt]

Click Has anyone noticed changes at their regular places? Besides the increase in prices, that is.

[Escoffier]

Click Has anyone noticed changes at their regular places? Besides the increase in prices, that is.

Other than higher prices, not really...quality seems the same, maybe a small decrease in serving size (which isn't necessarily a bad thing).

[dcs]

Check out this chart showing the staggering rise in the price of a bushel of wheat.

http://www.kingarthurflour.com/professiona...our-prices.html

Remarkable.

[DonRocks]

More than anything else, I'm seeing very little waste. Yes, prices are higher and portion sizes are noticeably smaller, but restaurants have become more efficient in gauging how much food is being left on tables, and are doling things out accordingly. Bread baskets are sometimes on-request only, or might contain only one piece of bread per diner; giant mounds of rice, previously used as filler, have turned into portions just large enough to sop up the protein; garnishes are carefully arranged rather than strewn haphazardly; even cold, leafy greens are being plated thinly and widely.

Restaurants that can discipline themselves to pull this off without looking stingy are going to be the survivors, but a lot of places are looking stingy these days, and many American diners have come to expect a devil-may-care abondanza attitude from restaurants; these are the people now cooking at home.

A hard dose of reality for the consumer, a once-in-a-generation shakeout for restaurants, a problem amplified by the inevitable collapse of "train leaving the station" speculation - it's ugly out there.

Cheers,

Rocks.

[dinwiddie]

What I have noticed is how much easier it is to get a reservation at places that are often hard to get into.

[Michael Landrum]

In a kontrapunkt coup de grace (or is that coup de foudre?), inspired by the great Zagat's-wielder, Patrick Bateman, we are now placing truffle oil-infused urinal cakes (in a 72 hour sous-vide process)--which is where truffle oil always belonged, by the way--exclusively in the men's rooms at both Ray's: The Steaks and Ray's: The Classics and will continue to do so throughout the duration of these terrible, terrible times.

Onward, stalwart diners! Excelsior! Ad astra per aspera!

ETA: In Silver Spring, we will be offering both a regular-style truffle oil-infused urinal cake, and a burrata-style as well.

ETA again: The venom-tipped rapier above is aimed not at restaurateurs and diners, as at first read may seem, but rather at the trend-frenzied reportage of the Post, who today are shameless apologists for the consequences of the same excesses that they so hysterically championed but a mere few months ago. And, yes, I am aware that, "Why, as a woodcock to mine own springe," I may well be justly killed with mine own treachery. But at least my treacherous instrument is unbated and envenomed, if you know what I mean.

[Poivrot Farci]

At Equinox, a D.C. fine-dining restaurant where business is down around 5 percent, one strategy is to get as much out of a chicken as possible. That means that in addition to using the breast meat for a light chicken salad, the legs feed staff and the bones help create chicken stock."You just have to know how to use the whole bird"

Revealing scoop. Bravo. Much more resourceful than throwing away chicken legs and bones and then buying chicken legs and bones. Do they make furniture with the feathers and cardboard boxes? Is clever wherewithal and culinary fundamentals not the successful standard during both prosperity and hardship?

[mdt]

Revealing scoop. Bravo. Much more resourceful than throwing away chicken legs and bones and then buying chicken legs and bones. Do they make furniture with the feathers and cardboard boxes? Is clever wherewithal not the successful standard during both prosperity and hardship?

Don't most decent restaurants do this anyway?

[The Hersch]

Bread baskets are sometimes on-request only, or might contain only one piece of bread per diner

This is something that has always puzzled me at Kinkead's. When I lunch there solo (and this was true last week), I am almost always given a big basket of bread, which would be enough for four people, with a crock of butter to match. I rarely consume even a fourth of either the butter or the bread, and I imagine they're required to discard what I leave. Maybe they could stop doing this and lower their prices a little?

[blakegwinn]

Revealing scoop. Bravo. Much more resourceful than throwing away chicken legs and bones and then buying chicken legs and bones. Do they make furniture with the feathers and cardboard boxes? Is clever wherewithal not the successful standard during both prosperity and hardship?

I hear the waiters are now covered with only house-tanned leather and furs, drinks will be served in bladders and all the silver has been replaced by bone implements. Waste not, want not.

This article actually made its way around my office up in New Jersey today and the chicken leg thing immediately jumped out at me. Maybe I am just having one of those "I walked 10 miles in the snow to get to school" moments that seniors often have, but in all my years on restaurant staffs I don't seem to remember a steady supply of free chicken legs coming my way. At least ones that weren't slipped to me by friends on the line.

[Sthitch]

A cook attempting to smuggle frozen lobster tails out of the restaurant in his pants cannot help a restaurant's bottom line.

[demandalicious]

A cook attempting to smuggle frozen lobster tails out of the restaurant in his pants cannot help a restaurant's bottom line.

This story is giving me Spinal Tap flashbacks.

[dinwiddie]

To take the thread a slightly different direction , have you seen any of your local restaurants that have been around a while go under? I recently called a local Italian place that has been around for 20 years to order a pizza to go, and the phone had been disconnected. When I drove by on 6/21, there was a sign on the door saying that it would be closed "the week of June 2nd." Now one does not disconnect the phone for a weeks vacation, and it still hasn't opened back up. It's a shame, since it was one of the places we went when we were in the mood for Italian and didn't want to drive into the city.

[Joe H]

At 8:00PM on Saturday night Reston Town Center was mobbed: Passion Fish had every table occupied on both floors, Jackson's had nearly a one hour wait, Big Bowl was mobbed with six or more stacked up waiting for carryout and a dozen waiting for the dining room. Clyde's, McCormick and Schmick's and others seemed more a throwback to crowds from the dot.com boom of years earlier. At 3:00PM this afternoon the ice skating rink barely had room for another skater while Jackson's dining room was two thirds full.

At 4:00PM 43 condos (out of 175 built) went on the market at auction at the Hyatt (nine unannounced from the advertised listing). Over 400 people literally spilled out of a banquet room clamoring for space and attention as bids escalated...to approximately half of what the asking price was at their peak two years ago when the ten story building opened. The condo, the Mercer in "Reston Heights", is a mile or so from Town Center but within a short walking distance from a future Metro stop as well as a 2+ million square foot development. Almost four years ago my wife and I looked at a unit (for speculation) out of the trailer they set up on site. Then, out of the trailer and before ground was broken, the price was over $300 a square foot. Later, I believe it pushed $450 a square foot at peak. Today, the average hammer price ranged from $235 to 280 a square foot depending on the floor, upgrades and mood of those who bid. Most went in the $245-250 range.

We left feeling that while Dubai may soon implode and CitiBank, GE and GM compete for apparent disaster of the day, a floor was put in on the housing market in a Reston condo auction. It was not as bad as I feared. A lot of people left empty handed expecting much lower bids.

[DonRocks]

Thanks for the interesting thoughts, Joe. While I can't speak to the general state of the economy, I can assure everyone that restaurants have been PACKED lately, especially on weekends, after a daunting period of emptiness that didn't actually last that long, but seemed like forever. If you're a struggling, distal, mom-n-pop that hasn't yet seen the bounce-back, I suspect the trickle-up effect from the more prime locations will be coming your way soon. Hold on and hang in there, and if you're a diner wanting to maximize support, please consider going out on a slower night earlier in the week.

Cheers,

Rocks.

[Joe H]

I received an interesting e-mail from the Mercer sales staff this afternoon: eight of the condos are still available for sale. AFTER the auction.

The way these were auctioned is worth a mention. The ads in the Post advertised that 29 were available. When we visited the building several weeks before the auction we were told that another five had been added totalling 34 which were available at the auction. At the auction itself four more were added that were not previously listed to bring the overall total to 38 (out of, I believe, 175 units). At the end of the sale-with all 38 auctioned off-an announcement was made that there were an additional five which had NOT been included and were available bringing the grand total either sold that day or still available to 43.

Now with the auction completed they still have eight more which for one reason or another are still available. I'm guessing that they have also had time to approach many of those at the auction to see if they might have any interest. Unless, of course, today's e-mail two weeks later, is their first attempt. I find this really fascinating.

1. Is the condo market that bad?

2. Is this building haunted?

3. Has the bottom really been found?

4. How many investors are out there who can put 25% down, provide a credit score of 750 and accept an interest rate at least a point higher when leased out? (I was told these were the financing requirements for this sale.)

5. Are people simply not willing to tie up their money given the current environment?

6. Has the market changed that much in the last two weeks?

My guess is that NOW there are several very real opportunities for bottom fishing at the Mercer. I wonder if they'll go under $200 a square foot? And, last, is the rental market weakening for those buying what may be rental property? I must note in closing that the Metropolitan, a new (almost two years old) 21 story rental property in Reston Town Center, seems to have a significant number of units still unoccupied. I wonder if their asking monthly rental has been coming down as the cost of a condo has been faliing?

[Ericandblueboy]

The real estate market sucks and it still hasn't bottomed out yet. Businesses are laying off people but the process isn't done yet. Many of those laid-off will have their homes foreclosed upon, further driving down the housing market.

[qwertyy]

At the risk of continuing a real estate conversation on a food Web site, click.

Take the last eight years of Republican rule. Georgetown, for decades the fabled center of the city's power elite, was said to have been displaced by the bucolic Virginia enclave of McLean, or "the new home of America's ruling class," as The New Republic put it in a 2006 cover story.

Now as the Obama Democrats begin their move to Washington, they appear to be moving the center of power back to the district. Moneyed Democrats are still attracted to Georgetown and Kalorama, young families to Chevy Chase and Capitol Hill, and 20-somethings to Adams Morgan, U Street and Logan Circle.

In the last month, there has been a sharp increase in interest in properties across the district, in both upscale and gentrifying neighborhoods, said Jim Firkser, an agent with TTR Sotheby's International Realty.

THE surge in interest, from Democratic administration officials, diplomats, journalists and big-money donors, has given real estate agents across Washington a glimmer of hope amid a cratering national housing market.

[Joe H]

http://www.lasvegassun.com/news/2008/dec/1...ut-cattle-call/

I was wondering why the Venetian was e-mailing me weekday room offers @ $159 including two show tickets to Blue Man Group and a stay at either the Venetian or the Palazzo. Earlier they'd included two tickets to Phantom for $169. And the room.

Anyone know how City Centre is doing?

[mtpleasanteater]

Speaking of Vegas I hear the Charile Trotter restaurant is failing & will be closed soon.

[Michael Landrum]

http://www.lasvegassun.com/news/2008/dec/1...ut-cattle-call/

I was wondering why the Venetian was e-mailing me weekday room offers @ $159 including two show tickets to Blue Man Group and a stay at either the Venetian or the Palazzo. Earlier they'd included two tickets to Phantom for $169. And the room.

Anyone know how City Centre is doing?

As far as I know, there is always plenty of work on Tropicana, even at Tropicana and Tee Pee. As Biggie said, "Girls Pee(p) Pee(p) when they see me/Nava-hos creep me in they Tee Pee."

Of course, this is all too close to Flamingo and Koval for me to feel right about any of it on any level.

[jpschust]

Speaking of Vegas I hear the Charile Trotter restaurant is failing & will be closed soon.

Fleur de Lis? If so, I never thought it was good- I got totally rude service there as a single diner.

[Keithstg]

Fleur de Lis? If so, I never thought it was good- I got totally rude service there as a single diner.

That is Hubert Keller's restaurant, not Trotter's., no?

[Ericandblueboy]

We got a free room for two nights at Bally's for MLK jr. weekend but no freebie show tickets.

[Joe H]

We got a free room for two nights at Bally's for MLK jr. weekend but no freebie show tickets.

This mailing was from November 20th and a follow up to a similar earlier promotion which included two tickets to Phantom along with a room for $159 a night. Until the past several months the promotions NEVER included free theater tickets-now they do. Ask to be included on their list of special mailings. They seem to average at least once a week right now. The Venetian is a really nice hotel with the Palazzo a brand new tower that features Jersey Boys as its show.

[Capital Icebox]

This mailing was from November 20th and a follow up to a similar earlier promotion which included two tickets to Phantom along with a room for $159 a night. Until the past several months the promotions NEVER included free theater tickets-now they do. Ask to be included on their list of special mailings. They seem to average at least once a week right now. The Venetian is a really nice hotel with the Palazzo a brand new tower that features Jersey Boys as its show.

Not quite right. We went in August and got the Palazzo deal for $189 with Phantom tickets.

And to keep this food-related, the bar tasting menu at Guy Savoy was a real disappointment.

[mtpleasanteater]

And to keep this food-related, the bar tasting menu at Guy Savoy was a real disappointment.

Was it at least cheaper than the regular tasting menu?

[Joe H]

The following is from Frank Bruni's interview with Fabio this afternoon:

“To be very honest with you, there will be less and less opportunity for chefs to cook what they want,” he said. “The price point needs to be lower. People need to feel they can come back.”

“Everyone’s going to have to be more recession-friendly.”

_____________

Restaurants are very "fragile" right now. Dining rooms may be full on Friday and Saturday evening but half of the same room may be empty on Tuesday afternoon or Wednesday evening. You can get into Minibar. (Yes, you can, on the first try but you're several weeks out for the six seats.) Two hour waits (i.e. Great American Restaurants) have become 15 minute waits. The best "cheap" restaurants have tables available at 7 or 8 on Friday night (i.e. Thai Square, Ravi Kabob). Central (Beard new restaurant of the year in the U. S. last year) has tables available on Friday night at peak hours (i.e. 7PM) if you call the night before.

And, Bank of America (after 4:00PM) now needs another 25 billion or so to be printed for them. Did I mention CitiBank's exposure in the greatest bubble of all, Dubai? Condos sold at auction in Reston that don't close? Retirees on Hilton Head and Scottsdale and Vegas who have saved two million dollars? They now live on 3% interest from this rather than 8% interest. That's $160,000 a year vs. $60,000. In-n-Out Burger is far more attractive than Robuchon or Guy Savoy.

_____________

"The only thing we have to fear is fear itself."

_____________

To everyone reading this: You can get a 30 year mortgage for 4 3/4% with a half point right now. Oil is $36.00 a barrel. Wine is now 30% off at many stores that trade on the internet. A new BMW that has sat on a lot for six months can be had for the price of a used car. My point is that there is an opportunity to take advantage of what might have been a calamitous time by spending now. A house, a car, a bottle of wine. Even Tandoori chicken and stir fry beef.

Could this bring Fabio back to D. C.? Can it bring who is reading this back to the restaurant (s) you have loved? Or to buy a car or a house? At some point it is not about capital preservation (what will happen to the bank you are preserving it in? What happens to the agency, the FDIC, who guaranteed this?). At some point it is about living, about believing that there is a literal once in a lifetime opportunity to buy a house for an interest rate that one's grandparents paid, to buy a car for a price from ten years ago or to have a nice dinner. Or a nice lunch. Or a nice omelotte.

There is nothing positive about what I am saying. The industry, the economy both here and, literally, the rest of the world are at more than a turning point; they are at a precipice. We are commiting suicide with our fear. And our fear is killing us.

When I worked on my Master's I spent a lot of time reading about the Depression and my industry. A number of people made a significant amount of money then. I marvelled at how they were able to take advantage of that opportunity. But they did. And, while I had hoped this would never happen, it seems that we now have a similar opportunity. If it's not the bottom, it's close enough.

Buy. Spend. Eat.

Tonight.

[deangold]

Just some observations from last nights Valentine's Day and the economy etc. This is just one data point but it is very illustrative of our pattern of recent business.

Customer Count was up over 15%

Cost of our Prix Fixe was 10% less for an essentially similar menu. A few more options this year, simpler amuse, added truffles after dessert.

Sales were up just a little: average spending per customer was off around 5% after accounting for the lower menu price. Few bottles of wine were sold and those sold were lower priced than last year.

People seem to still be going out, and in greater number even, but they are more careful with their dollars.

[JPW]

The apocalypse

[Ericandblueboy]

One of the comments was "call me when Masa starts delivery."

[Keithstg]

Call me crazy, but I think that this is something that perhaps should have been done sooner, economy nonwithstanding. If anyone's familiar with the layout of Per Se, they know that the bar and lounge area was pretty much dead space - used as people waited to be seated, etc., and did not see a ton of traffic from those popping in for a drink or whatever. Heck, had I known about this last Saturday I would have stopped in for a drink and a salmon cornet prior to heading across the circle for dinner!

[goodeats]

Although I have not been here, I've seen recommendations to the restaurant Town in NYC and MYMag now reports it closed.

Apparently, also on the rise are Food Auctions.

Interesting.

[KissAndFly]

Had to pick something up from the mall last Saturday and the parking lot was packed...think folks are at least looking..maybe not buying?

[wine-o]

I went this past Tuesday, and make the mistake of thinking I could walk in at 8 PM. The restaurant was full, and so was the bar - we took a table and sipped a drink while waiting for something to open up, but fifteen minutes went by, and ... nothing. Nobody was moving from the bar, and the low-lying tables in the lounge are not my cup of tea for dining, but our delightful server went over and secured us a table in the main dining room, which opened up at about 8:30. In the general case, the crowds at Bourbon Steak have not let up since the week it opened.

As an aside, I'm beginning to think the worst days of the economy might be behind us, restaurant-wise. Perhaps it's an upward blip in an overall downward trend, I don't know, but it's clearly an upward blip at the minimum. I'm sensing consumer confidence beginning to wax, not only in the press, but also amongst both diners and staff in my little world.

Cheers,

Rocks.

I can attest to the upward blip on the consumer side, hotel occupancy, The weather is awesome! People are starting to get confident/cocky. Staff in all restaurants are being challenged. LOVE IT!

[FunnyJohn]

This is a depressing thread so I'll inject a little "silver lining": At least when we go out and dine (that is those who can afford to), we can think of it as pump priming rather than self-indulgence.

[The Hersch]

I didn't mention this in my Kinkead's post of the other day, but when I was there for lunch on Friday they weren't packed, but they were quite busy. For whatever that's worth.

[monavano]

This is a depressing thread so I'll inject a little "silver lining": At least when we go out and dine (that is those who can afford to), we can think of it as pump priming rather than self-indulgence.

Same here. Mr. MV and I (plus one dog ) enjoyed dinner al fresco at Chadwick's (Old Town) on Friday and it was hopping. The area just seemed to be coming alive again.

[StephenB]

About a month ago, my broker asked me how the lifestyle of my acquaintances had changed since the economic downturn. I asked around but nobody seemed to understand the question.

One friend gave me a lecture on macroeconomics and the greediness of the financial community.

Another said he had stopped using credit cards because he doesn't like the interest rates. When I pointed out that there is no interest if you pay promptly, he said he doesn't care, he just doesn't like the rates.

Another (she will recognize herself here) said she likes bargains. When I asked her if that means she'd changed, or adjusted, in some way, she said no.

Finally, I got a real answer, though I can't believe it's typical of the community at large. One well-to-do friend said he had changed his landscaping contract from five visits a year to four. Thank you -- at last -- for a real answer! I told him I understood how he had earned his summa cum laude degree -- he responds to questions.

But the consensus from top to bottom seems to be that people haven't thought about it much in terms of their personal behavior, or, perhaps, they're unwilling to address the subject in conversation.

[Pool Boy]

Well, I know I have adjusted my spending habits in many ways. I won't share all of them here, but one way that I have cut back is that I have purchase not a single bottle of wine off of a mailer since Spring 2008. It's killing me, but I've stuck with the plan so far.

[Ericandblueboy]

Assuming you are securely employed, the best that you can do is spend like you have in the past. Spending generally would help bouy the economy.

[qwertyy]

I've been spending like a drunken sailor on leave. Traveling, eating out, shopping. What the hell--I have a good job that isn't going anywhere, and I'm not retiring for at least 30 more years. It's all about living in a society, no?

[treznor]

Assuming you are securely employed, the best that you can do is spend like you have in the past. Spending generally would help bouy the economy.

The problem with a poor economy is that people stop feeling securely employed, especially when we keep hearing about job cuts in the press, etc. A self-fulfilling circle... People hear about job cuts so they cut spending to prepare if they get cut, which causes overall spending to go down, which causes job cuts.

I've fallen into this myself as well. I'm saving more, though that's partially because the stock market is so low right now that as long as I'm fine with keeping the money in for 4-5 years that it presents a good investment I believe. We've also started recently to take wine with us to restaurants and use corkage. Not sure if that's really a economy thing though or the fact that I have too much wine at home... Guess it works out on both ends. Realistically though we end up paying corkage (which isn't all the expensive at all where I live now) plus we get a round or so of pre-dinner drinks so we still end up spending a decent amount to help out the restaurants

[DameEdna]

Swine producers are seeing a reduction of sales because of fear of swine flu (or "grippe

porcine", as I prefer). We can help revive the slumping economy by eating more bacon.

A half remembered quote from a spokesperson of the American Livestock Breeds Conservancy

"the only way to save endangered livestock breeds is to eat them"

(no, not all of them ... buying some will encourage farmers to raise more).

Wine producers need for us to drink more (a little tiny bit more).

Yes, it's a plan. Might even work. I'm willing to try.

[lackadaisi]

But the consensus from top to bottom seems to be that people haven't thought about it much in terms of their personal behavior, or, perhaps, they're unwilling to address the subject in conversation.

Your friends are very lucky or very shy around you.

Many of my friends have lost their jobs and/or had their salaries cut extensively. Many of those still employed are suffering from both survivor's guilt and fear. Those who are slow are taking voluntary furloughs (that they can't afford), and those who are not are working harder than ever to prevent those are are slow from losing their jobs. People are trying to save, but it is much harder because their salaries are less. They are not eating out. They are not spending. They are moving in with parents after years of living alone. On the other hand, others are taking advantage of the opportunity to reflect, realizing that they have been working for more money instead of happiness and are making changes. Not all is bad. But, it is much different.

If you have the money, by all means please spend it, but it is sometimes good to acknowledge that spending really isn't an option for everyone (such as the landscaper who was likely just making ends meet before he had his earning cut by at least 20%).

[dcs]

High-End Restaurants Are Now a High-Stakes Business

[DonRocks]

On 4/9/2008 at 0:25 PM, Joe H said:

In my industry business has slowed down dramatically just in the past several months. Generally, I sell construction projects which can have a lead time of one to three years or more. Yet, in this environment financing is much more difficult to come by and for the companies who have already received financial commitments, many of them are taking a wait and see approach to the coming season. I'm wondering if the restaurant industry is seeing significant slowdowns? My guess is, yes. I'm also guessing that this all started about two or three months ago.

Last week I was in Germany (Munich, Cologne, Hamburg and Italy (Verona, Milan) for eight days. Hotels were empty yet many German factories are running near capacity.

For those who are interested this is the greatest real estate bubble on earth:

http://www.cbsnews.com/stories/2007/10/12/...753_page3.shtml

"It's easy to laugh about it now. The palm island project sold out in less than a week, and houses that initially went for $1 million are being resold by original investors and real estate speculators for five times that. But the day 60 Minutes went ashore, a month after the official opening, the island was a ghost town.

"People just started moving in," Sultan Bin Sulayem explains."

_______________________

I have friends who live in Dubai and tell me that Palm Island has no one living there. 100% speculation. Also, the vast majority of condos are coming on line right now, almost all speculation.

_______________________

This thread was started about 5 months after the Great Recession started, and about 14 months before it ended - looking back, there is no question that we had entered into a bubble in late 2007.

And I believe we've been in a second bubble during the past 2-3 years as well (which is already beginning to collapse, or certainly shrink - anyone who thinks otherwise should take a long look at the incredible piece of work that cheezepowder has done - yes, she's only one person, and no, she can't possibly account for every restaurant, but this is the best list out there, and a definite trend has been in place for quite awhile now). The recovery brought enormous supply into Washington, DC - much of it untrained and unfit to work in restaurants, and right now I'm very worried about that supply (and I'm talking about restaurant employees). The last time I said this was about 5-6 years ago, but I'm going to start saying it again: If you're in a stable, safe job, think *long and hard* before giving it up right now. And make doubly, triply sure that it's actually stable and safe.

I'm not even going to go into how quickly housing prices rebounded after the "worst economic disaster since the Great Depression" (not my words).

"A 10-Year History of DC's Housing Market in One Chart" by Jeff Clabaugh on wtop.com

I'm pretty sure a 15-year or a 20-year chart would look a lot more worrisome, as housing was going up by double-digits for several years in a row before it peaked in 2007.

[lion]

I agree DC does have a bit of a bubble at the moment in restaurants and housing. For example, when you drive on 395 south of the Capitol near the water all you can see these days are high rise condo buildings and restaurants also seem to have a glut of the same caliber lack of interesting character. I wonder if the growth in DC proper will continue at this level during the current presidential term. 

[Pool Boy]

On 2/25/2017 at 10:42 PM, lion said:

I agree DC does have a bit of a bubble at the moment in restaurants and housing. For example, when you drive on 395 south of the Capitol near the water all you can see these days are high rise condo buildings and restaurants also seem to have a glut of the same caliber lack of interesting character. I wonder if the growth in DC proper will continue at this level during the current presidential term. 

It's still continuing, IMHO. But I think it is possible that it is slowing down....a little. I mean, how many millennials and baby boomers are still moving in to the city (and staying?), and more importantly, how long will that trend last? Particularly, it'll be interesting to see the Millennial generation and what they do as they all start having kids - stay in urban areas, or shift to suburban? Millennials are now age 23 to 38 - in prime home-buying and start-a-family modes, even by delayed standards (and aversion to debt and permanency). And, as the Millennials age, their desire to pay for $20 cocktails regularly may wane as they decide to start families. And not sure Baby Boomers (age range = 54 to 72) will fill in that gap, spending their retirement dollars to order those same $20 cocktails.

While DC became red-hot in the apartments and condos zone, the current DC population has risen from 601,00 in the 2010 census to an estimated population of 693,000 - the highest point since the 1970s. But I think it is a matter of time before we hit an upper limit for need of more condos and apartments. I could be wrong, because the building continues in other close in urban areas (I see it all over Ballston, for example). And the roll-out of houses, townhouses, condos and apartments in the suburbs that continues, does so, IMO, at a more slow, deliberate pace.

A good example is the Konterra development on both sides of 95 in the Laurel, MD area betweent DM-200 (the ICC) and Route 198.  Some apartments have gone in recently. Most of the houses and townhouses from the last of the 2000s wave finished in the late 2000s. Much of the new houses have gone in first in the Montgomery County section of what is the total footprint of the Konterra development. But there are vast tracts of land that go untouched, and will probably stay untouched until the developers are sure they have strong interest and can sell through newly created inventory.

It is fascinating to watch.

[susan]

I disagree with the statement that DC has a bubble for housing. Regardless of what may be seen when driving on 395 (which I assuming is Navy Yard), the real estate market is more complex than what “looks like overbuilding”.

The reason condos and apartments continue to be built is because developers are doing their homework and watching the market (and banks are not taking on the same level of risk pre-2007). It’s foolish to think they would spend upwards of $100M on a new residential building with a “if you build it they will come” mentality.

Millennials may be growing old, however, they have also adapted to an urban lifestyle of live smaller, use less, walk to work. And while some of them may decide to move to the suburbs to pursue what some would consider an old fashioned perception of the American dream, plenty are content with or would rather raise their children in the city. With regards to the comment of them “spending their retirement dollars to order those same $20 cocktails” you may forget that the area median income or AMI in DC is $110k for a family of four… That’s right, almost double the national AMI of $59k. Furthermore, comments like that show how little Baby Boomers actually know about the lifestyle of Millennials which spend less annually on food, apparel, and housing than ANY previous generation… Why do you think that is? Feel free to look for yourself here: https://www.bls.gov/opub/mlr/2018/article/fun-facts-about-millennials.htm

Lastly without delving into the microeconomics of job growth, housing vacancy vs construction trends, level of education, etc… DC has earned itself a spot on the list of international power cities such as NYC, LA, London, Paris, Singapore to name a few.This will not be changing anytime soon. The trend of international investment in American real estate is staggering. 

[DaveO]

2 hours ago, Pool Boy said:

A good example is the Konterra development on both sides of 95 in the Laurel, MD area betweent DM-200 (the ICC) and Route 198.  Some apartments have gone in recently. Most of the houses and townhouses from the last of the 2000s wave finished in the late 2000s. Much of the new houses have gone in first in the Montgomery County section of what is the total footprint of the Konterra development. But there are vast tracts of land that go untouched, and will probably stay untouched until the developers are sure they have strong interest and can sell through newly created inventory.

It is fascinating to watch.

Although current literature on Konterra doesn’t reference this I’m quite positive  partnership members owned much of or the bulk of the land in Laurel as far back as the early 1980’s.  I did some work with the Gould family business then and recall development boards of the plans that far back.

 One other recollection: The late  Kingdon Gould Jr was the head of the business then.  He has a distinguished history.  He was possibly in his late 50’s or early 60’s.   He was in great shape.  I thought I was in great shape then, working out aerobically all the time.  But noooo.....

Kingdon Gould used to bound up the stairs to his office at the time, maybe 6, 8 floors up.  I’d be following him, my thighs burning and at the end huffing and puffing.  

“Who is this guy????”  I believe he was rated among the best squash players in America at the time (maybe in his age bracket). 

Any time I see Konterra mentioned I think of those damned stairs and trying to fake it that I was in as good shape as Mr Gould.    

They owned the ground back in the early 1980’s if not earlier.  They are still developing the project with much more capacity.   That is the definition of patient money.

[Pool Boy]

On 5/12/2018 at 4:25 PM, susan said:

I disagree with the statement that DC has a bubble for housing. Regardless of what may be seen when driving on 395 (which I assuming is Navy Yard), the real estate market is more complex than what “looks like overbuilding”.

The reason condos and apartments continue to be built is because developers are doing their homework and watching the market (and banks are not taking on the same level of risk pre-2007). It’s foolish to think they would spend upwards of $100M on a new residential building with a “if you build it they will come” mentality.

Millennials may be growing old, however, they have also adapted to an urban lifestyle of live smaller, use less, walk to work. And while some of them may decide to move to the suburbs to pursue what some would consider an old fashioned perception of the American dream, plenty are content with or would rather raise their children in the city. With regards to the comment of them “spending their retirement dollars to order those same $20 cocktails” you may forget that the area median income or AMI in DC is $110k for a family of four… That’s right, almost double the national AMI of $59k. Furthermore, comments like that show how little Baby Boomers actually know about the lifestyle of Millennials which spend less annually on food, apparel, and housing than ANY previous generation… Why do you think that is? Feel free to look for yourself here: https://www.bls.gov/opub/mlr/2018/article/fun-facts-about-millennials.htm

Lastly without delving into the microeconomics of job growth, housing vacancy vs construction trends, level of education, etc… DC has earned itself a spot on the list of international power cities such as NYC, LA, London, Paris, Singapore to name a few.This will not be changing anytime soon. The trend of international investment in American real estate is staggering. 

Point 1/21 - I am sure they are doing their homework. But, at least for apartment buildings (not condos), even with homework, you are, in essence, building it and hoping they will come? Sorry but had to be a little cheeky here.

Point 3 - Entirely possible - that said, the jury is out until the kids hit school age. That is usually when the parents decide that they can either afford private schools in order to stay in the city, or instead go to where the best public schools are if they cannot afford i (or do not want to, say, for instead saving for college for the kid).

Point 4/5 - I think you misread my point. I was suggesting that millennials may, as they start to have families, buy housing, etc, their tolerance for paying for $20 cocktails might wane. And probably not disappear, it would depend at what stage a millennial the person is and so on. I followed that suggestion that, anticipating someone might say 'Hey Boomers will fill that gap easy!'for buying $20 cocktails. I am sure many could afford it given their social security, 401k, and government pensions. But.....would they? I sure would, but I am not sure what percent of Boomers would. Some may move to the city, for convenience and access, but inertia often means you stay where you know unless you've long had a plan for something different.  I honestly do not know what the average retired person in the DC area's yearly income is. If both members of a couple worked, I think they'd make $4-5K/month off of social security. Minimum required 401k distributions would likely by in the $1-2K/year range at least but possibly (much?) higher. Pensions are unlikely except for ex-Feds most likely.

Point 6/7 - I agree.