Third in a weekly series of reports on operators’ survival tactics in market areas that have been hit especially hard by the nation’s economic downturn.
DETROIT — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“I’ve been through five recessions, but this one is pretty ugly,” said Matt Prentice, chief executive of Matt Prentice Restaurant Group, based in the northwestern Detroit suburb of Bingham Farms. Prentice predicts that the economy won’t pick up again until 2010. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“Michigan is going through a lot of struggles, but it’s a very resilient state,” said Frank Lombardo, president of Askar Brands, franchisor of the Papa Romano’s and Mr. Pita brands in suburban Detroit. “The rest of the country is getting a taste of what Michigan has gone through for a long time.” — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Michigan had the nation’s highest unemployment rate, 8.5 percent, in July, and the Detroit area had the 12th-highest home foreclosure rate in the second quarter: one for every 137 households, a 73-percent spike in just one year, according to the RealtyTrac Monthly U.S. Foreclosure Market Report. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
The psychological effects of eroding net worth on discretionary spending for restaurant meals appear to be worsening even among well-heeled consumers. For example, sellers of high-end homes are being forced to lower asking prices because prospective buyers are few and far between, said Dawn Rassel, a real estate agent in affluent Birmingham, Mich. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“It’s still a buyer’s market, big-time,” she said. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Ohio’s July unemployment rate of 7.2 percent was the nation’s fifth-highest, and the state’s home foreclosure rate rose 26.9 percent in the second quarter, versus a year earlier. Some metropolitan areas in the state suffered extremely high rates of both indicators as Ohio lost more manufacturing jobs. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
About 300,000 such jobs have disappeared in Ohio since 1990, according to the U.S. Bureau of Labor Statistics. The majority of those positions were auto-related, and other industries also moved factories elsewhere. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“The outlook isn’t at all good,” said Dana Johnson, chief economist of Comerica Bank, who closely follows the Midwest. “Michigan had the worst per-capita income growth over the past 10 years. Indiana and Ohio also did badly.” — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Johnson forecast that Michigan’s gross domestic product will shrink about 1.5 percent this year. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
From quick service to fine dining, the region’s multiunit restaurant operators are emphasizing value in various ways to counteract the sagging economy. Many are adding new value-priced combo meals or offering two-for-one entrées for a limited time. Nearly everyone is doing more advertising. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“You have to just keep beating the bushes,” Prentice said. “There is still business to be won; you just have to work harder to get it.” — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Prentice, who runs a large catering business in addition to seven restaurants, said his downtown Detroit restaurant is profitable. However, he blames the economy for recently reported financial problems of some other downtown fine-dining restaurants. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“Hospitals are the one business that are doing very well,” said Prentice, who has closed or sold a few of his restaurants over the years while diversifying into hospital foodservice with the expanding Henry Ford Health System. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Bill Roberts, who said his same-store sales were off just 4 percent for the first half of this year at his three restaurants in Detroit’s affluent Oakland County, is optimistic about an economic recovery. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“We are more neighborhood places. Weeknights are pretty good, and they’re our bread and butter,” he said, citing his $35 check averages. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Restaurateur Cameron Mitchell of Columbus, Ohio, said he is tallying sales of about $240,000 a week at his new 280-seat upscale restaurant, Ocean Prime, in Troy, Mich., which also is benefiting this summer from a 70-seat patio. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“Detroit gets a bad rap, but there is so much wealth in the northwest corridor,” Mitchell said. “And we’re the new kid on the block,” he added while predicting that Ocean Prime’s strong business will continue, even with a hefty $80 per-person dinner check average. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Locally owned Andiamo, an 11-unit Italian white-tablecloth group which ordinarily experiences a business drop in mid-summer, doubled its July sales from year-earlier levels with the help of a two-for-one entrée promotion, chief executive Joseph Vicari said. The increase in volume made up for the extra food cost of the complimentary entrée, he explained. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Another successful promotion was giveaways of free dinners to fathers on Father’s Day, normally not a strong dinner occasion. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“We were crazy busy—as busy as Mother’s Day,” Vicari said. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
He also got nearly twice as many sign-ups as usual in July for his “Mille Grazie” loyalty program, which costs $10 to join. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
The four-unit Tom’s Oyster Bar chain has been trying offerings of more small plates at lower prices since experiencing a 25-percent sales drop at some of the restaurants, said owner Tom Brandel. He has seen his former $50 check average slip to $40. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
The Detroit-area-based Big Boy chain has seen good results from promoting everyday value. Big Boy, operator or franchisor of about 130 Michigan units, does no couponing but offers limited-time discounts year-round. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“People gravitate to comfortable things during tough times,” Big Boy chief executive Tony Michaels said. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Having a central commissary helps the brand hold down its commodity costs, and Big Boy has had to raise menu prices only “a little,” he said. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
With an average check of $9.80, Olga’s Kitchen, a Detroit-based casual-family hybrid specializing in grilled pita sandwiches, holds its own, said Matt Carpenter, Olga’s chief operating officer and a former Applebee’s executive. He called Olga’s bundling program, which pairs sandwiches with salads or curly fries at prices ranging from $5.99 to $7.99, “a winning strategy.” — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Olga’s Kitchen has realized cost savings by consolidating some purchases and eliminating certain ingredients, such as dried blueberries, that were used in only one menu item, Carpenter said. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
While its current check average is 7 percent lower than the former $10.50 average, Carpenter said, the increased volume that lower prices generate make the business more profitable. Olga’s has stepped up its radio and print advertising for the bundled items and other promotions, such as its 99-cent iced tea, a price that’s half what it used to be. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Papa Romano’s is distributing fliers for delivery at local hotels while sister chain Mr. Pita has landed student-feeding contracts for 60 schools and deployed 15 “pita wagons” to do catering at ball parks, art fairs and other events. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Big Boy ran two TV ad campaigns as the economic downturn began, one carrying the “It’s a Michigan thing” theme. — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
“We really played on the fact that we are the local company,” Michaels said. “This is our home, and we need to do what we can to support the state. It hasn’t closed, and it’s not closing.” — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.
Return to Hard-Hit Markets main page — Restaurateurs in auto-industry-dependent southeastern Michigan and northeastern Ohio may be accustomed to lingering economic downturns, but they’re using previously developed survival strategies with new urgency in the face of what many are calling the worst business slump in recent history.