I always believed that if I was smart, got a good education, worked hard and a lot that I could be successful. Lately I am coming to grips with the reality of a power much greater than myself. The aggregate power of the US consumer economy;
The US unemployment rate has been unchanged or worse every month since April, the change in payroll employment has been negative since April, and the negatives have gotten bigger and bigger since July, with the September number equaling April and May combined. (source U. S. Bureau of Labor Statistics 10/28/08)
Reuters says; U.S. consumer confidence plunged to a record low in October amid signs the economy is sliding into a deep recession, threatening to pull the rest of the world along with it.and further;
U.S. restaurants are enduring their toughest time in 17 years as tight credit and falling home prices compel consumers to eat out less or spend less when they do, a National Restaurant Association economist said on Wednesday.
"This is the most challenging environment for restaurant operators since 1991," Hudson Riehle, NRA chief economist, told Reuters. "Depending on how consumer spending proceeds in the fourth quarter, it could be the most challenging environment since the early 1980s."
Casual dining in particular is being hard hit as consumer spending shifts toward fast food and grocery stores, according to this news source
Casual dining restaurants are being hit hard by a softening U.S. economy, as consumers tighten their household budgets to cope with high food and energy prices. While some fast food restaurants are benefiting from penny-pinching consumers at home and strong sales overseas, mid-level domestic casual dining restaurants are facing declining same-store sales.
Two chains closed their doors after filing for Chapter 7 bankruptcy protection. More than 300 Irish pub-themed Bennigan’s Grill & Tavern locations, as well as nationwide Steak & Ale outlets were told not to open on Tuesday, as the chains no longer had enough money to pay staff through the rest of the week.
The casual dining restaurant closings are “something we’re going to see more of over the next 6 to 12 months,” Amy Greene, a director at Avondale Partners who tracks the restaurant industry, told The New York Times.
At Austin Cantina we've reached the point of reducing our service hours because it has been costing more to stay open than closed. Several weeks ago we stopped selling weekday lunch when the numbers indicated that not a single week for the previous month had averaged $100.00 a day in lunch sales. When dinner business was heavy we needed kitchen staff in by 11:00 anyway so it made sense to serve lunch, but with dinner sales slowing we frequently don't need weekday kitchen staff before 2:00 p.m.
The past 2 weekends I've gotten Saturday morning calls from my brunch server alerting me to the fact that she wouldn't be at work in time to set up the dining room for service. My Saturday morning dishwasher is a good kid, but is consistently late for his shift, and I don't really like getting up before the sun on Saturday morning, so I've reviewed our costs vs revenues since Sept 1st. Setting aside fixed costs which don't change if we're open or closed I reviewed the 2 largest variable costs, Food and Labor. Other variable costs include beverages, unemployment & payroll taxes, cleaning supplies, paper good, etc... Average Saturday morning sales have been about $225 while food cost is about 30% (a decent industry number) and 3 employees (dishwasher, cook, server) cost about $150, leaving less than $20 to cover all other variable costs and contribute any small something to fixed costs. In sum, it is costing me more to wake up on Saturday morning and stress about who isn't going to show up for work than it would to just stay in bed.
What is most difficult about all of this is my own inability to relax and rest because anytime I'm not actually working in the restaurant, or working on something for the restaurant I find myself feeling guilty that there must be something that I could or should be doing to make things better, and I just don't know what to do. Apparently Olive Garden is having some success in marketing itself as a "value" alternative, but I have a hard time doing that when one of our core values has always been that QUALITY has it's own value, and I sell Northwest Pork (not from east coast feedlots), Grass-Fed Beef, and we actually cook food (rather than just opening and heating cans of prepared food the way some of our lower cost competitors do), all of which costs more on the production side. If I'm going to sacrifice those values I'm not sure that I continue to have any reason to be here at all.
So, how have sales been? For the sake of comparison I'd like to note that the biggest drop in month to month sales occurred last December, after November sales had been boosted by positive reviews in both the Times & Weekly coming out toward the start of the month, December dropped to what could be called "normal", except for the very, very slow couple weeks leading up to New Years when lots of people are on vacation. Late December, when we get only about 8 hours of daylight is not the best time to enjoy Seattle, so lots of locals depart the most northern latitude of any major city in the "lower 48" for something warmer and sunny. Anyway, the drop between August and September of this year has been the second biggest drop in month to month sales in actual dollars or as a percent of previous month's sales. October to date has also seen a drop of about 15% (month to date) in guests through the door.
I need to defer to "the market" to tell me if it is worth continuing here. If you value what we do, don't just come in to eat more often. Please, do that, but also bring friends and go to those user-review websites like citysearch, yelp, urban spoon, etc... and write positive things about us. I'm certain that there is no single thing that will allow us to continue, but thinking in aggregate, if enough people value what we do, and they each contribute toward our survival, we can carry on. If not I'll need to listen to the wisdom of the market and find a different path.