SF operators say Feb.’s gate less than golden

SF operators say Feb.’s gate less than golden

SAN FRANCISCO —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Even as the national economy slumped last fall, San Francisco’s restaurants benefited from a still relatively strong convention business, California residents who stayed in state for vacations, and a warm and sunny January that helped boost traffic during a major local restaurant promotion. But February has seen a turn in fortunes for many operators, as the strengthening U.S. dollar has kept foreign visitors away, businesses have reined in spending and consumer confidence has waned. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

“Restaurants that were up 7 [percent] and 8 percent last year are now down 3 [percent] or 4 percent,” said Kevin Westlye, executive director of the Golden Gate Restaurant Association. He added that the San Francisco-based group believes foodservice sales could fall as much as 25 percent in February, compared to the year earlier. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Throughout the city and nearby areas, restaurateurs are feeling the downturn to varying degrees and taking steps to blunt its effects. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

At Spruce [3] in San Francisco and the Village Pub [4] in the nearby suburb of Woodside, Calif., overall per-visit spending and meal counts are off, said chef Mark Sullivan. Lunch business, however, is up, he noted, theorizing that business people on tighter expense accounts are choosing to dine during a less expensive daypart. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Sullivan said he is tracking food and labor costs on a daily basis, and has scaled back on labor as sales have dipped. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

“If you don’t have a solid sense of what you are spending, you can’t adjust,” he said. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Michael Dellar, co-founder and president of Lark Creek Restaurant Group [5], which operates 10 fine-dining restaurants in and around San Francisco, said December saw a drop in special-event business, including private parties. Soon after, visit frequency declined, which Dellar attributes to people eating out less frequently or patronizing neighborhood rather than destination restaurants. Business on Mondays and Tuesdays has softened more than on the weekends, but the effect is still comprehensive, with the average check down around 3 percent to 5 percent per cover, Dellar said. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

People are making more deliberate choices in what they order, he said, noting: “Some people have cut from bottles of wine to glasses of wine. People don’t want to look extravagant.” —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Lark Creek Restaurant Group has scaled back on labor and renegotiated with suppliers, while maintaining a strict commitment to local and seasonal product sourcing, Dellar said. To drive sales, Dellar said he is focusing on providing more customer service and increasing the emphasis on special events, such as a February Dungeness crab festival and a sweepstakes and gift certificate program for graduates. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Dellar noted that one of his partners, San Francisco McDonald’s [6] franchisee Scott Rodrick, has enjoyed landmark business at his fast-food restaurants as spending-wary consumers have traded down. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Despite being opened in January 2008 as the economy began its decline, The Epic Roasthouse [7] and Waterbar, side-by-side steak and seafood restaurants, respectively, only recently saw sales soften, said managing partner Pete Sittnick. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

“This was a project that was a couple of years in the making, so there was a real pent-up anticipation,” Sittnick said. “When we first opened, we got a tremendous push, especially from local folks checking us out. We got to ride that wave of newness right into summer months, in which, in addition to two restaurants, we could seat 200 people on the patio.” —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Sittnick said the two restaurants had met their 2008 projections until the latter part of October, then “the start of 2009 was definitely challenging,” he said. “We got a couple of added perks based on some spectacular weather in January and a couple of conventions. That helped.” —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

As winter weather rolled in with February, sales began to dip again, Sittnick said. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

“We’re doing 10 [percent] to 15 percent off what we forecasted,” he said. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

To appeal to consumers looking for value, Epic has launched a “Three B’s” deal featuring a burger, beer and brownie for $20. Similarly, Spruce offers a Burger and Burgundy promotion. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Convention business has generally held up in San Francisco, with only three cancellations so far in 2009, said Laurie Armstrong, vice president of marketing and communications at the San Francisco Convention and Visitors Bureau. Hotel occupancy remained strong through October, which registered 83.1 percent, but tumbled to 67.6 percent in November. Now, hotels are offering more package deals that add a free night with prior nights paid, Armstrong said. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Similar to business at Epic and Waterbar, the InterContinental’s restaurant Luce [8] benefited from the much-anticipated debut of its host hotel in February 2008. The restaurant received a further boost when Esquire magazine named Luce’s Dominique Crenn its Best Chef in America for 2008. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Beginning in early February, though, signs of trouble have appeared, said Sean Olmstead, InterContinental director of food and beverage. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

“At dinner, we’ll see some couples share a salad or an entrée, and we’re seeing lunch people not drinking as much wine,” he said. “People are trading down in value.” —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

The InterContinental has “tried not to raise any prices from 2008,” Olmstead said. The hotel also has added low-cost meals and is making sure guests know about its Esquire coup. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

“We put fliers in room that tell guests what chef Crenn has accomplished,” he said. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Located downtown, the Mandarin Oriental hotel has seen an erosion in business meals sales. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

“We’re not getting as many of those business diners,” said Joshua Nudd, executive chef at the hotel’s restaurant, Silks [9]. “They’ve shifted to more breakfast and lunch meetings.” —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.

Nudd said that cutting expenses at Silks has become a priority. One way he is tackling that is by using proteins better, including creating lunch menus that feature meat and fish not consumed in the prior evening. —Although a vibrant restaurant culture helped operators in this city keep the recession at bay until recently, falling tourism and troubles in local high-tech industries are starting to have a negative impact.