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Restaurateurs adapt to economy

BRIAN DUGGAN
bduggan@nevadaappeal.com
Shannon Litz
ALL |

Charlie Abowd said his restaurant, Adele’s, is usually a spot people go to for special occasions: birthdays, anniversaries and the like.

But in today’s economy, that may not be enough, he said.

Abowd and his wife Karen have revamped their long-time Carson City restaurant with a new menu and interior decor to attract more customers. The effort was not done out of vanity, but out of necessity, Abowd said. And like Adele’s, many Carson City restaurants have changed the way they do business to stay afloat.

Abowd said he should have made the changes more than a year ago before the Realtors, contractors and developers that once filled the tables at Adele’s dried up.

“We had to come to the conclusion that our numbers were significantly down because of that,” he said. “It brought to us a rather obvious answer: We were going to have to redefine what we do as restaurateurs.”

That has meant brand new lunch and dinner menus, which now include reduced prices on many items while adding some new dishes, such as chicken fried steak to the dinner menu (served with pan milk gravy and chopped bacon), and more options for side dishes.

The idea, Abowd said, is “to offer a better value to the customer, and that’s one of the key words in today’s economy is value.”

Meanwhile, the heavy drapes that once covered the restaurant are now gone and the chairs reupholstered, giving the interior a modern feel while keeping its Victorian-era inspiration.

“You have to change,” Karen Abowd said. “Everybody in this industry knows it … if you want to be around when everything’s said and done.”

Abowd’s experience seems to mirror what many restaurant owners locally and around the nation have experienced during this economic downturn.

Ron Paul, the president of Technomic Inc., a food industry consulting firm in Chicago, said the restaurant industry is down 8 percent on average from its 2008 peak.

“Things have kind of bottomed out, but are not improving in any significant way yet,” Paul said. “The industry is still in, a quote, ‘recession’ and down from where it was two to three years ago.”

To cope with the decrease in business, many restaurants have turned to promotions, discounts and new menus to attract customers, Paul said, adding many have introduced bar menus that offer inexpensive meals, “not to erode their image in their dining room, but to give customers a bargain.”

Paul said the restaurant industry is tied to unemployment, currently 14 percent in Nevada – the highest in the nation. He added this recession has been deeper for the restaurant industry than previous downturns.

“If employment were to turn around and get better, we think the industry would benefit immediately,” he said.

There has been some good news: April was the first month since December 2008 that Carson City’s restaurants reported an increase in sales, growing by 6.5 percent for $6.3 million, according to the latest taxable sales report. And that’s compared to a month during the 2009 legislative session, usually one of the more lucrative times for Carson City restaurants.

But the latest monthly index on the health of the restaurant industry showed another contraction in the industry in May, according to a report released by the National Restaurant Association last month.

While the industry has improved since the darkest days of the financial crisis in late 2008, many restaurant owners are still worried about the economy. The National Restaurant Association reported that in May. 15 percent thought the economy was going to worsen, up from 10 percent in April, while 33 percent thought conditions would improve, down from 41 percent in April.

Other Carson City restaurants have shifted with the times, too.

For Tony Pastini, owner of Kim Lee’s Sushi and Oyster Bar in downtown Carson City, changing with the times has included offering more for less, which includes a $10 lunch combo that would have cost $20 in better times.

“We stayed open later, we stayed open an extra day, we added an oyster bar, we have a bigger line of desserts, we came up with a bunch of combos,” he said.

“The rent doesn’t go down, the power doesn’t go down, insurance doesn’t go down, taxes go down, can’t lower the wages, in fact the wages are going up,” Pastini said, referring to the recent minimum wage increase. “That brought us from breaking even or making a couple bucks to breaking even or losing a couple bucks.”

Mick Watanar, the co-owner of The Basil Restaurant said only one word can describe his thoughts on the restaurant business today: “Survive.”

He said traffic is down about 20 percent since his Thai restaurant’s peak. That has meant fewer hours for some employees, renovating the restaurant’s interior to attract business and cutting costs on items that wouldn’t affect the food such as reducing the number of napkins the restaurant uses.

“Little small details, but combined that’s a significant cost reduction,” Watanar said.

Watanar said he still believes the U.S. economy will recover, but how much is another question.

“I believe it’s not going to be as good as before,” he said. “I don’t think it’s going to be as growing as we had before.”