Restaurants seek recipe for economic sustenance

Posted: 7:17 pm Thu, August 5, 2010
By Tania Anderson
Special to The Daily Record

Walk into any restaurant along a busy street in downtown Baltimore and you might be pleasantly surprised by the hustle and bustle of diners and wait staff. Sure, we’re in a recession, but people gotta eat.

On the other hand, you could walk into a restaurant that’s eerily quiet. Remember, we’re in a recession. People are eating at home.

Ask any restaurateur these days for a status report on the health of the restaurant business in Maryland and you’ll get guarded optimism mixed with a little worry. Most agree that life for restaurants is better than it was a year ago. But many will say it’s still a mixed bag of bad months and good months — and no consistent trend of things looking up.

So, with the fear of the unknown come new marketing strategies, including lots of social media and some creative pricing packages. Restaurants are also learning the value of truly connecting to the community they call home and making sure their new and regular customers are given top-notch food, delivered with a smile.

“The recession has made us more focused,” said Tony Foreman, owner of five restaurants in Baltimore. “The margin for error is less than it has been for some years.”

‘Not totally out of the woods’

Restaurants throughout Maryland are reporting nearly 1 percent growth in revenue from January through May compared with the same months last year, according to the Restaurant Association of Maryland. So far they’ve done $3.5 billion in sales, with Dorchester County posting the most growth — more than 13 percent.

Restaurants in Queen Anne’s County, however, have had a tough year so far, with a drop of more than 10 percent in revenue from January through May.

“The good news is, we’re up. The bad news is we’re comparing it to last year,” when business plummeted, said Paul Hartgen, president and CEO of the Restaurant Association of Maryland. “But there are restaurants opening and people are looking for places to buy.”

High-end restaurants like Charleston and lower-priced dining spots like Donna’s say in general they’re doing well. But even at a place like Donna’s, where you can get lunch for $10 and dinner for less than $30 in any of its six locations, there are month-to-month fluctuations.

“We thought we had spotted a trend and now we’re not sure,” said Alan Hirsch, an owner of Donna’s, which saw a 12 percent drop in revenue from 2008 to 2009. “It’s better than last year, but we’re not totally out of the woods.”

Other restaurateurs see a juicier picture. The Prime Rib, where dinner entrees range from $35 to $50, has seen 5 to 10 percent revenue increases each month this year compared with last year.

Foreman, whose five restaurants include Charleston, said business has been good — but it’s harder to earn.

“This is not like D.C., where people are entertaining on a company budget,” Foreman said. “[Baltimore] is a family town. You have to have a personal rapport with the audience. You have to earn the business.”

Virtual word of mouth

And some of that rapport has gone online in a big way. More and more restaurants are using social networking sites like Facebook, FourSquare and Twitter to drum up followings that will lead to more diners. When one person clicks on the “like” button for the restaurant, everyone on that person’s list of friends sees that and then may be curious to check it out.

Call it virtual word of mouth.

Take Annabel Lee Tavern, a Baltimore restaurant named after Edgar Allan Poe’s last poem. Its Facebook page has more than 500 fans, some of whom have posted nothing but positive comments and messages. There are the loving ones — “I LOVE THE DUCK FAT FRIES!” — and longing comments: “I miss you Annabel Lee.”

And, a staple of the restaurant business, feedback with a demanding tone: “I thought you were posting daily specials … what happened?”

Sergio Vitale, co-owner of Aldo’s Ristorante Italiano, uses Facebook to run ads for special events at his Little Italy restaurant. His restaurant has also experienced fluctuations in business this year, with busy months alternating with painfully slow ones.

“Facebook is the best advertising dollars we’ve ever spent,” said Vitale, whose restaurant saw a 30 percent drop in revenue in 2009. “What’s great is [the ads] are targeted.”

Things looking up?

Others are tinkering with pricing on their menus. Foreman said some of his restaurants have successfully used pre-fixed menus to attract customers. With these, restaurants plan out a three-course meal and set a per-person price.

“It used to be that there was more concern about the choice being restricted,” Foreman says. “Now they like a well thought-out menu and a very predictable ticket.”

The Prime Rib offers a light Thursday night menu where items are $20 or less. On Sundays, there’s a special wine list with half-price bottles. The restaurant will give customers a free round of drinks on their birthday or anniversary if they sign up to get the restaurant’s e-mails. And The Prime Rib sends gift cards to local business leaders who aren’t regular customers.

“We’ve never worked harder in marketing,” said David Derewicz, general manager of The Prime Rib. “We’re trying everything in hopes of not spending money on advertising. All these things are inexpensive.”

Like most industries, restaurants say things can only go up from here. Maryland restaurants are expected to generate $8.7 billion in sales this year, according to the National Restaurant Association.

“People are feeling better about our picture,” Hartgen said. “Employment in restaurants was second in the nation for growth in May. That’s a good sign for Maryland.”