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StarChefs
 
2008 Summer Economy Survey

  by Grace Nguyen and JJ Proville
October 2008

It’s hard to believe that the restaurant industry was expected to grow 4.4% in 2008, according to a National Restaurant Association (NRA) forecast, especially when chefs were hit with a slew of financial blows in 2007—higher wholesale food prices (the largest increase in 27 years), energy prices, and gas prices. It’s a stalwart industry, and has always been one, even in periods of economic slowdown such as now: 2008 shows projected real sales growth for the 17th consecutive year. Regardless of the industry’s continued growth, food prices remain inflated leaving chefs to move budgeting strategies first on the agenda as they plan for the upcoming season.

The industry’s resilience can be attributed to creative budgeting strategies like those of Danny Meyer of Union Square Hospitality Group (USHG). To fight high food costs, Meyer has begun bulk-buying many products for all of his restaurants—paper towels, bottled water, butter, produce, meat and so on—allowing higher sales for suppliers in exchange for lower prices. More importantly, he lets management cherry pick which items to buy with the group, preserving his chefs’ individuality. “We still want them to decide who they think has the best product for what they want to cook,” Meyer says. Plans like this keep the industry flourishing, even if it’s at a slower rate. Regardless of the industry’s continued growth, food prices remain inflated, leaving every chef to move budgeting strategies first on the agenda as they plan for the upcoming season.

Our 2008 StarChefs Summer Economy Survey provides a close-up of the current state of the restaurant industry and shows how chefs and consumers stay afloat when food prices skyrocket. On the up side, those high food costs prompted chefs to tighten their business practices: minimizing waste, holding less inventory, and controlling portion sizes were the three leading responses cited, coupled with strategies such as raising menu prices, using cheaper ingredients, and changing suppliers. Most consumers now retreat to their homes for meals while steadfast restaurant-goers are showing chefs that small is big, ordering more appetizers (to share) and fewer entrees and wines by the glass instead of bottles.

Below you’ll find the statistics that support our results. Our data comes from three sample groups: Rising Stars*, a broader foodservice industry ** (front and back of the house), and consumers***. The inclusion of our survey results from Rising Stars award winners is intended to give you a glimpse at an elite group of restaurants who represent the vanguard of the contemporary American dining scene.

The Hardest Hit
Roughly half of the industry reported that business was down. Using three standards of measurement—number of covers, average check, and number of private dining reservations—to determine the decline in business, the majority reported a decrease in number of covers. Decreases in private dining events and check average were next. Below are the statistics, broken down by industry.

Overall Business Down Comparison between Rising Stars and General

Graphs: Overall Business Down Comparison between Rising Stars and General
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Rising Stars

Graph: Rising Stars - This content requires the Adobe Flash Player. Get Flash.
Graph: Of those Rising Stars who responded business is down - This content requires the Adobe Flash Player. Get Flash.

 

% That Say Number of Covers are down

% of Sector that Say Check  Average Down

% That Say Private Dining  is Down

Fine Dining

88%

0%

12%

Upscale Casual

100%

0%

0%

Hotel Fine Dining

0%

33%

0%

Other

75%

0%

25%



Broader Foodservice Industry

Graph: Broader Foodservice Industry - This content requires the Adobe Flash Player. Get Flash.
Graph: Of those in the Broader Foodservice Industry who responded business is down - This content requires the Adobe Flash Player. Get Flash.

Waste No More
Chefs are managing with an even sharper eye to minimize waste, control portion sizes, and hold less inventory. (Click here to see 30 Ways to a more sustainable restaurant) Chefs realize that convenience comes with price and have begun making foods they used to buy. Rising Star Chef Brian Rae of RM Seafood (Las Vegas) started a bread program to save money, offering New England lobster rolls on potato buns made in-house.

Foodservice Industry Responses

Graph: Of those in the Overall Industry who responded business is down - This content requires the Adobe Flash Player. Get Flash.

Small is Big
As chefs increase menu prices, diners have little choice but to adjust their dining habits: 50% of consumers eat out less and nearly a quarter of consumers (24%) are ordering more small plates while cutting back the libations for most of the evening.

Percentage of Consumer Responses

Graph: Consumer Responses - This content requires the Adobe Flash Player. Get Flash.

Leave ‘Em Wanting More
With continued sales growth, the restaurant industry is a driving force of the economy, adding 400,000 jobs in 2007 and expected to add another two million in the next decade, according to the NRA. But with the financial markets still in disarray, there is little sign that food costs will decrease in the near future. In the mean time, the entire industry is on a budget: controlling waste and portion sizes while switching to cheaper ingredients should help buffer inflated operational costs. Consumers are adopting smart menu-ordering strategies while not compromising the overall experience. When we asked consumers about tips, 91% say they do not tip less, despite their budget. Front-of-house would be wise to fine tune their service skills as 2007 Rising Star Chef Ford Fry of JCT Kitchen & Bar (Atlanta) has already figured out: “We are up 15% in sales over last year. I feel that $16-$26 entree points are safe as long as the food and total experience exceeds our guests’ expectations.”

*Rising Stars
Of the group of the chefs and foodservice professionals in our Rising Stars audience poll, 48% operate in independent fine dining establishments, followed by 27% in independent upscale casual, 15% in hotel dining, and 10% (other) that includes private clubs and resorts.
Location: Rising Stars are located mostly in New York (18%), Illinois (17%), California (12%), Georgia (11%) and and Florida (9%).

**Broader Foodservice Industry
The majority of foodservice professionals in our general audience poll fall within these groups: 26% operate in independent fine dining establishments, followed by 23% in independent upscale casual, 7% in independent casual, 8% in hotel dining, and 29% (other) included private chefs and catering companies, private clubs and resorts, and consultants.  
Location: Respondents were mainly located in New York (15%), California (13%), Florida (8%) and Illinois (7%).

***Consumers
47% had an average household income above $100,000,
21% between $75,000 and $100,000
18% between $50,000 and $75,000

Location: Consumers were mainly based out of California (18%), New York (14%), Florida (8%), Massachusetts (5%), and Illinois (5%).

 

 
  • 30 Ways (and Days) to a More Sustainable Restaurant
  • Dining and the Economy Overview
  • 2007 StarChefs.com Salary Survey

  •    Published: October 2008

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