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Self-Fulfilling Prophecies

As you must know, I work in two restaurants. My lunch job is at Michael’s (high-end chain steakhouse). My dinner job is at Carney’s Corner (somewhat high-end Mom ‘n Pop prime steakhouse). Both restaurants have been hit by the receding economy the last couple years.

My personal stats on Lunch:

  • I went from 4-5 lunch shifts a week, to 2-3 + an O/C.
  • The money used to average out weekly to $100+ per shift; that’s gone down to about $75.
  • Meantime, we used to run 5 or 6 servers. Now we go with 3 or 4.

Stats on Dinner:

  • I used to have 4 shifts, now I have 3.
  • We used to make a reliable $200+ weekend nights and $150 per weekday night. That’s dropped to about $160 and $100.
  • Used to be 4 servers weekends, 3 weekdays. Now it’s 3 and 2.

At Carney’s the owners’ answer to falling business is to cut prices. And that’s their only answer.

I addressed this in abbreviated form a year ago in Hammer And All The Nails, wherein I observed and groused that Carney’s husband Harry had only one tool in his box: cutting prices. The title refers to the old saying, when your only tool is a hammer, eventually every problem looks like a nail.

Sadly, things have only gotten worse. The most precipitous decline in check average came about when Harry collected all the ‘bar plate’ specials (he used to drum up business by offering cut rate entrees for bar customers only – for instance, a smaller filet mignon, with mashed potatoes, and a salad, all on one plate for about half the price of the regular, larger filet) and put them on a special menu supplement – now to be available also in the dining room. Gone were the inserts of the ‘specials’ and fresh fish that went inside the regular menus. Now there was a separate open-face ‘specials’ menu, featuring about eight cheap entrees, and the fresh fish.

We all know waiters don’t like to sell cheap stuff. We don’t make as much money because we’re tipped on a percentage of the check. That’s why coupons, happy hours, and early bird specials are roundly despised by waiters. Yes, we recognize the need to keep customer traffic healthy. Yes, we understand that these lower-echelon diners will still be paying full price for other elements of their meals (booze, appetizers, whatever). And yes, we know that getting new guests to try the restaurant is a good thing that might yield repeat business down the road.

But damn it, I still have a problem with it.

First, let me grouse about the new ‘specials’ menu at Carney’s. First, it’s an attention-hog. It’s like a sleazy girl with an okay body wearing a really short, tight dress. Even if she’s not your type, you’re not in the market, or you’re even a gay man, you will take notice and stare. Well, this menu is open faced, as I said. It is staring at the guest every single second. Whereas the ‘real’ menu is two pages book-style. It’s dynamite, loaded with things like Australian lobster tails, double cut rack of New Zealand lamb, New York pepper steak. But it’s closed. I can’t tell you how often diners don’t even open the regular menu. The ‘specials’ menu is staring them in the face. The prices are 50-60% of the regular menu. Portions are smaller, but it includes a salad – usually a $6 add-on in the ‘real’ menu.

So, yes, I can hardly blame people for ordering from this special menu. But it does get worse. Everything on the specials menu is a cannibalization of impressive and superior entrees on the regular menu. The specials are basically half orders. The lamb? Just a single rack and already sliced into chops: half price. Pork loins? Sliced pieces from the same amazing thick-cut pork chop: 2/3 the size, half the price. And everything, incidentally, is prepared the same way as the regular menu.

The other day, Carney, herself, pointed to the ‘specials’ menu and said to me, ‘You know, this is what’s saving us. This has become 70% of our overall entrée sales.’

Great. Just like when Coca-Cola’s marketing folk introduces five new flavors/permutations of Coke, and then brag about how the new products have become 20% of gross sales.

Well guess what? The pie hasn’t gotten bigger. It’s just been divided differently. And it’s your same pie, you idiots. And further, what you’ve ‘added’ to the mix are actually increased sales of the lowest priced and least profitable items.

Don’t know if you’re keeping track through the blog, but Carney’s does not advertise.

That said, I want to add this: I can’t tell you how many times regular, well-to-do Carney’s guests will sit down – prepared to order their Carney’s Corner favorites – and see this new ‘specials’ menu and opt for a small filet instead of their usual 10 oz. baseball cut.

These are people who don’t need to be ‘sold’ by lower prices. They are already here. They are here because they already like the traditional Carney’s fare – portion, preparation, price, everything. They are ready to order off the ‘big kids’ menu. But instead our owners just cut their own income in half by billboarding the specials menu.

Harry’s take is along the lines of shearing the sheep many times rather than slaughtering it once. Sure, wealthy people can afford the higher prices. But wealthy people are not immune to fear; they are looking to cut back where they can just like us normal poor people. Harry reasons (though he hasn’t said this specifically to anyone) if these frightened rich people see they can eat at Carney’s for $85 instead of the usual $120, then they’ll come back more frequently – maybe keep up their historical frequency of visits.

And it’s a fact that’s hard to argue with that, but that doesn’t usually stop me. Rather than rehash the argument I made in another post, I’ll just state here that without making people aware of this strategy (read: promotion and advertising) it takes too long to effect. We could well be out of this downturn by the time people are widely cognizant that Carney’s is quite reasonable for a ‘fine dining’ restaurant. But more on that day later.

Rather, for Carney’s my take – stipulating the reality that there’s no advertising going on – would be to have smaller, inferior, and different items on the lower-priced ‘specials’ menu. If people are motivated by price, then let them take a flier on some of these items. Why not offer a Choice top sirloin (we serve only prime steaks currently) that doesn’t duplicate the filet, new york, and rib eyes we do serve? It’s a cheaper cut in the first place, it’s also a lower grade. It would still be a good steak. Just not prime.

Meantime, this strategy preserves the primacy of the signature dishes, the dishes long-time guests return for again and again. And they pay the regular prices for them.

Let’s move on to Michael’s, my lunch job. A corporate place, Michael’s has behaved like all the others. First there was the New York and Crab package special. Used to be a summer-only thing to boost business in the slowest months. Lately? I haven’t been keeping track meticulously, but I think it’s been running without cessation for the last two years. It is steak and crab legs and a salad and side item and dessert for each person for $60 per person. Yes, each person gets all of those things. Not shared. It’s more food than you’d know what to do with, at Michael’s quantities. It’s about $100 of food at normal prices.

I won’t lie. As a lunch server, this was a great thing. It was a massive up-sell over our $15-27 lunch fare. For dinner, it didn’t work so well. Mainly, though, I want to show the sign posts on the way to Michael’s self-fulfilling prophecy.

Next, we were dealt the Prix Fixe Deluxe at lunch. A selection from five normal-sized lunch entrees inclusive of a side, choice of soup or salad, followed by a dessert: $22. These items ordered a la carte from the lunch menu would run in the neighborhood of $38.

God bless them, Michael’s at least will promote when necessary. After a moderate media blitz, the Prix Fixe Deluxer’s (let’s just call them Prix) flood into the restaurant, ID tags dangling from their belts, the men in ill-fitting suits, the women wearing hair and outfits that have that ‘I woke up this morning at my boyfriend’s apartment and didn’t have a change of clothes nor the time to do my hair again’ –look.

Business ticked up for about a month, at least volume did. Of course, we weren’t making any more money. Remember Restaurant Overstaffing? Don’t get me started there . . .

Similar to Carney rationalizing the ‘specials menu,’ our Michael’s pre-shift meetings featured a lot of talk about how all these Prix are people who wouldn’t normally be coming into the restaurant. And it was easy to agree with that. It was depressing to imagine how many covers we would have had some days without the Prix.

But which came first? The desire to go to Michael’s or the desire to get a good deal at Michael’s? In other words, what would have happened if the moderate media blitz instead promoted the fantastic lunch menu and high quality product and service? I kind of think we would have gotten a similar uptick in volume, and from our core-type guests: people with money.

Both my restaurants have created self-fulfilling prophecies by cutting prices then sitting back and noticing, ‘Wow! This program is really popular for us! It’s a good thing we did this, because it’s only thing people are buying!’

Well of course! And I think a $15,000 Mercedes-Benz sedan and a $75 Louis Vuitton hand bag and See’s Candies for $2.99 a pound would also be popular with their respective clientele. They’d find that quickly those items became the majority of their sales.

Congratulations! You’ve just destroyed your brand.

Which is my final point. Now that this new order has been achieved – Carney’s and Michael’s are successfully selling to more guests by lowering the prices and their profits, while still putting out the same quality – how do you re-convert your core guests once the economy turns around? How do you suddenly (or even gradually) take away these deals your guests have come to expect from, and even to identify with your restaurant? How (just one more rhetorical question, I promise) do you get them to feel good about paying $50 for a steak when they used to pay $30 and be perfectly happy?

The restaurant industry is in tread-water, stay-afloat mode right now. We’re all just trying to get through this till the seas calm down again. Unfortunately, what’s happening to many of the misguided and/or desperate places is they are making the wrong decisions and in the process disfiguring themselves. When they emerge from the economic storm, they will be unrecognizable to those wealthy whales [I know this metaphor has gotten out of hand, but just live with it, okay?] who are ready again to buy $100 lobsters and $200 bottles of wine. Meanwhile, their new ‘regulars’ will recoil when suddenly the ‘little’ menu is no longer available.

It takes some restaurants (Carney’s Corner) years to build up to a reputation of ‘high quality and expensive, but worth it'; and it takes others (Michael’s, who started out that way) years to entrench themselves in that position, able to fend off challengers because all those ‘qualities’ remain constant.

Now that I’m finished mangling my Stormy Seas, Bad Weather metaphor, let me finish with a new one. My restaurants will be like that unbelievable girl you somehow dated one time in high school. Then she appears at the 10 year reunion after too many years of clubbing, bad boys, cigarettes and cocaine. She doesn’t sound the same. She doesn’t look the same. She doesn’t have the same mojo. And even though you know you have a shot at her now, you’re really just not interested.

About waiternotes

I'm a waiter in a couple of fine dining restaurants.

11 responses »

  1. My corporate chain is doing the same thing, offering a combo meal sort of thing at reduced price. It does two things: brings in a few cheap-ass mofos who don’t tip and won’t come back later, and gives all our steady regular customers a cheaper option to exploit.

    Reply
  2. I agree with your assessment of the situation. Once you lower prices it is hard to go back to where they once were before the recession. Then a different clientele comes in , a cheaper one that might in the eyes of the big spenders who frequented the place before give an impression the restaurant is not as status as it once was. They might head elsewhere then what have you got left. From a waiter’s point of view it could be a nightmare but still the money you are making still isn’t too bad yet.. Cutting prices should be a last option in my view. Have 1 or 2 features of the day but cut it at that.

    Reply
    • WaiterEx, yes, the money is still hanging on, so it’s not like I’m printing resumes. And of course, I consider my diatribe here still theory rather than fact. We’ll see how it plays out. But this is my prediction.

      Reply
  3. Pingback: Tweets that mention Self-Fulfilling Prophecies « Waiternotes – Inside The Restaurant -- Topsy.com

  4. This is my 1st visit to your site.As an owner &/or manager for the last 30 yrs I could’nt agree with you more on pricing-it kills your cash flow-alienates your staff and guts your alcohol sales (which both staff & owners count on)when I worked in Florida ppl who followed specials were known as the “Boca Cocktail Crowd” the recipe for a Boca is 1 glass tap h2o-5 slices of lemon & 5 pax of Equal.
    I have 1 question are these the actual names of your employers? If so are they aware of this blog?

    Reply
  5. Very on point. Live by the discount, die by the discount.

    Fortunately the Chef/Owner of our place has been smart enough to “stay the course” so we won’t have to worry about all the bargain hunters disappearing when business takes the uptick, as it has begun to do already.

    Good to see you posting again. I guess that’s the good news/bad news about the reduction in shifts at work, eh?

    Reply
    • Thanks for the comments! Actually, my reduced schedule is nothing brand new. Really, I’ve just been slacking. I make little notes here and there during my shifts, then when enough collect on my desk at home, I finally bake them into a post or three. I’m still working through my stuff.

      Reply
  6. About the only thing I would disagree with you on is your statement that, “Both restaurants have been hit by the receding economy the last couple years.” They have not.

    What they have been hit with is twofold: 1. a total lack of understanding effective restaurant marketing and 2. not having any clear-cut strategy for adding distinctive value for your guests.

    The combination of both leads you to create transactional tactics that, like you outline so well, kill any hope for growth.

    Reply
  7. Pingback: Do Price Reductions Dilute Your Restaurant’s Brand? | Back Burner

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