Restaurant Finance Across America
Archived postings from April, 2008...
Tips for Surviving (and Profiting) From the Recession and Credit Crunch
Posted: Tue, April 22, 2008 at 10:09am (CDT)
While economists wait to announce the official start of the 2008 U.S. recession, many restaurant operators in the sit-down dining segment have no doubt that we're in for a nasty storm right now, no matter when the official siren sounds. Some argue that a recession is useful for returning overheated markets to equilibrium, although there has been little of that in food, labor and energy prices. What makes this current downturn so insidious is the "double whammy" of rising food costs and lagging customer counts. Raise prices to protect margin and lose customers? Or, keep prices level and absorb the food cost rise and loss of margin? This sounds like the restaurant version of double jeopardy and no wonder it has perplexed owners and operators to the nth degree.
Our experience suggests that this current consumer recession (we'll call it that), commodity bubble and credit crunch will jar the restaurant industry for years to come. We recall that casual dining withstood the recession of 1990-1992 and expanded nicely for 10 to 15 years thereafter. Not again, we predict. Who would argue that family dining recovered from the bashing it took during the same recessionary period? ...continue reading.