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Tough times, even for high-end restaurants
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ORLANDO — When high-end steak chains — known for their high-rolling clientele — are mailing $25 discount cards, advertising happy-hour specials and promoting value deals, it can only mean one thing: Hard times in the restaurant industry have gone much deeper than was expected even a year ago.
Casual-dining and fast-food places expected a difficult patch and braced for it with new strategies and cost-cutting. But establishments that serve $44 filet mignons and $200 bottles of Burgundy were thought to be insulated from the current downturn. No longer.
Sales are down at some of the biggest names in the pricey-steakhouse business, where a meal with wine can easily cost more than $80 a person.
Lake Mary-based Ruth's Chris Steak House posted a 5.6 percent fourth-quarter sales drop at company restaurants open at least a year. The Capital Grille, which Orlando-based Darden Restaurants bought in October, said comparable restaurant sales dipped 2.2 percent during its latest quarter. Morton's reported recently that comparable-restaurant sales have slowed and its quarterly profit fell by more than half, as fewer customers dined in its dark-wood-paneled dining rooms.
During the go-go days of the late 1990s and recent boom years, fancy chophouses exploded in popularity and expanded rapidly, becoming the place for a special night out or the de facto gathering spot for harried business travelers looking to unwind or negotiate the next big deal.
"They were great . . . when everyone was making a lot of money," said Christopher Muller, professor and director of the center for multiunit-restaurant management at the Rosen College of Hospitality Management at the University of Central Florida.
"But with the unexpected change in the marketplace, what you get (with them) is a recipe for disaster," he said.
A unique combination of factors is affecting the market segment, which just last month saw the dramatic firing of Craig Miller from the once high-flying Ruth's Chris. They include the drying up of business-expense accounts and a slowdown in convention business: Attendee traffic at the Orange County Convention Center is down 23 percent for the first two months of this year.
Other factors pressuring chains: rising beef and other food costs and the sharp downturn in the housing market that has many feeling less flush.
To cope, steakhouses are working to make their clubby restaurants a little more hip, accessible — and affordable. Ruth's Chris, with 121 restaurants, is mailing out $25 gift cards in the Orlando area and has launched a new bar menu and specialty-drink line, encouraging customers to either dine in the restaurant's lounge or in the dining room with or without a reservation.
The Palm steakhouse chain, with more than 25 locations including one at the Hard Rock Hotel at Universal Orlando, recently rolled out new "hand-crafted cocktails" and a "bar bites" menu with appetizers starting at $8. Michael Martin, general manager of the Palm in Orlando, said business at his restaurant has been strong, despite the general economic slowdown.
"We're actually doing really well," he said.
Fleming's, owned by Tampa-based OSI Restaurant Partners, has advertised fixed-price-brunch menus for Easter and Mother's Day, although a company spokeswoman said the promotions were not related to the economy. The Capital Grille recently said it's working to boost its private-dining business to offset a slowdown in customer visits.
Morton's, with 79 locations worldwide, is advertising happy-hour and late-night appetizer specials such as $5 crab cakes at its revamped bars with expanded seating. In Orlando, where Morton's remodeled its bar last year, the restaurant also recently started advertising free weekly wine tastings.
"We are actually seeing an increase of guests coming in, and they are bringing in more friends," Jenna Romanach, sales and marketing manager for Morton's in Orlando, said of the restaurant's free wine tastings on Tuesday nights.
One recent Tuesday, Mike and Jennifer Gaw of Winter Garden where among those sampling pinots and merlot at the Morton's at Sand Lake Road and Dr. Phillips Boulevard.
The couple, who were celebrating their wedding anniversary, said the uncertain economy and a new baby had them dining out less frequently.
"We're regulars here, and we are definitely eating here less than we used to be," said Jennifer Gaw, 33.
Orlando businessman Chris Byrd said Morton's afterwork appetizer specials are part of what now draws him to the bar on a regular basis.
"It's what I eat for dinner a lot of the time," he said, noting the $5 filet-mignon sandwiches were his favorite. As far as eating in Morton's main dining room, Byrd, 57, said it's something he rarely does.
"Why would I go in there by myself?" he said.
Still, establishments are being careful not to let their cut-rate promotions damage their sterling reputations. The offers are not advertised widely and typically e-mailed or sent to those on frequent-guest lists compiled by the restaurants.
"When things are slower, you adapt," said Malcolm Knapp, a New York-based restaurant-industry consultant.
"You are still not giving away the store," he said of the limited-time offers. "It's an exposure to remind people of a nice place to dine out."
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$25 gift card will pay for the baked potatoe & salad, but you still pay $44 for a steak. A good deal.
#1 Posted by suntan on May 17, 2008 at 6:37 a.m. (Suggest removal)
You aren't kidding there Suntan, take 25 bucks ,buy some nice tasty steaks, take them home and throw them on the grill.
Just as good and definitely cheaper.
#2 Posted by Jadip811 on May 17, 2008 at 10:17 a.m. (Suggest removal)
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