Restaurant Owners: Business Trends Going Forward

With consumers keeping a clenched fist around their wallets, discretionary spending continues to drop. One of the places feeling the pinch is restaurants. For the past several months, restaurant owners have begun to deploy a host of cost-cutting measures and incentives to keep their tables filled and turning over. Currently offering a spectrum of business advice geared to eateries is American Express OPEN, the small business division of American Express. One of its initiatives is “The Business of Food” an online resource for restaurant owners. Recently, one of its culinary advisors, Dick Williams, forecasted a list of trends that will impact eateries through the end of this year continuing into 2009. They are:

• Business entertaining and corporate parties will continue to be pulled back. Given economic uncertainty in key industries, restaurant owners can expect to see significantly less holiday business. Industry experts report bookings are down about 15% for the 2008 holiday season as compared to the same period last year. • The real estate market will offer relief. The softening of real estate prices and decrease in demand for restaurant sites is benefiting strong restaurant companies. Developers are offering better deals, and while rents have not decreased yet, they are likely to soften in the next year. • Menu prices will increase. Menu prices increased 4.3% in 2008. With food costs expected to increase by 7 - 9% in 2009, restaurant owners will pass along costs to diners to maintain margins. • Currency exchange will weigh on restaurateurs. Many fine-dining restaurants, particularly those in major cities, have benefited from foreign tourists taking advantage of the strength of the Euro and British Pound against the American dollar. While this customer base was strong in 2008, many are concerned that as economic turmoil spreads to the rest of the world, fewer visitors will be coming to the U.S. in 2009.

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