VOL. 126 | NO. 161 | Thursday, August 18, 2011
Economy Has Little Effect on Fine Dining
By Sarah Baker
In the wake of 9/11, Estée Lauder Cos. chairman Leonard Lauder noticed his company was selling more lipstick than usual.
A 2008 New York Times article explained Lauder proposed lipstick purchases were a way to gauge the economy. When it’s shaky, he said in the article, women are more apt to boost their mood by buying inexpensive lipstick than pricey shoes.
Perhaps this “lipstick theory” can be translated to fine dining, said Shawn Massey, partner with The Shopping Center Group LLC.
“People talk about a recession going on, but I’ve tried to get a late reservation at a decent restaurant on a Saturday for the last six or seven weeks, and the Elegant Farmer, Sweet Grass, the new Acre Restaurant that opened up – everything is always booked,” Massey said. “Finally got something at Interim and they were packed; I got the last table. From a dining perspective, I don’t know how big of a recession is going on.”
In uncertain economic times, consumers often nix big-ticket items, such as new cars, and opt to purchase “affordable luxuries” that make them feel good.
Food and drink are very much a part of this category, said Mike Miller, president of the Memphis Restaurant Association and owner of Patrick’s Steaks & Spirits.
“You see people making a value decision – ‘Well, am I going to go out and spend more on a car, home improvement or even worse, investing in the stock market these days, or am I going to stick with something that I know?’” Miller said. “It’s that sense of comfort, knowing that you’re going to go to some place that you’ve been to before – or that maybe is a new experience but you know because of the culture in Memphis that likely it’s going to be a great experience and you’re going to get some really good food.”
The food industry far exceeds customer satisfaction, Miller said. As a city, Memphis is full of opportunities for new restaurant concepts. Though Memphis isn’t immune to commodity prices and food inflation, it’s on an even keel for the most part when analyzing peer markets.
“You look at what’s going on in the fine-dining scene, and there’s lots of people out there now that really are competitive and even on a national scale are recognized for the quality of what they do,” he said. “That’s why I think you find people coming to Memphis to settle and really expand on their culinary experience and bring things to Memphis that maybe weren’t here 20 years ago.”
Most people also don’t recognize that the hospitality industry – including restaurants, bars, hotels and entertainment venues – is the second-largest industry in Tennessee, behind only government. That means it’s the second-largest employer in the state, a huge portion of the tax base, and “the backbone of the charitable side of things,” Miller said.
“Sometimes people don’t grasp that they go into a restaurant and they look at their server, and think they get paid $2.13 an hour and there’s no real significant impact on their daily life, but our industry is huge in everybody’s lives,” Miller said. “Not only in the cultural experience of going and enjoying a great meal, but just in the everyday economic impact that’s in the background.”
However, it’s important to remember consumers’ everyday purchase decisions vary by household, said Dr. John Gnuschke, director of the Sparks Bureau of Business and Economic Research at the University of Memphis. The cost of a nice dinner in percentage terms is not as important for families making $200,000 as it is for a family making $50,000, he said.
“Most fine dinners are paid for out of disposable income and are just part of normal life for higher-income groups,” Gnuschke said. “The same dinner would be a special occasion for lower-income families.
“This is especially true during recessions when uncertainty rises and lower-income families are more concerned with minimizing expenditures. So good restaurants can do well even when things look bleak for many families because they serve a special group of people that are still making money.”
But dining out isn’t just an affordable luxury, said Scott Barton, senior vice president of CB Richard Ellis Memphis’ retail services division. Sometimes, it simply comes down to convenience.
“Busy families, especially with both parents working, can probably justify it as a way to avoid time spent cooking and cleaning up and as a way to spend time with family as they try to keep up with daily life,” he said.