Low cost dining pushes out chic gourmet restaurants

KLAIPEDA - With the economic crisis forcing people into a saving mode, many are tightening up by putting off a luxurious purchase or a trip. However, for the fussy eater, relinquishing habits of savoring the gastronomic pleasures at a fine restaurant may be the hardest thing to do. As restaurants slash their prices and menus are adjusted to diners’ thrifty budgets, this might seem to be good news for everyone. Nevertheless, the restaurant industry laments its over 30 percent turnover decline in 2009.
“As far as I hear from my colleagues, sales in many restaurants have gone down by 30 – 40 percent.

It means that every bar and restaurant had to assume certain readjustments, such as downsizing their staff, reviewing their menus, scratching out costlier items, marketing cheaper dishes and focusing on discounts. Those that have not done so are closed or about to be closed now. I see that, particularly new restaurants have been hit hardest by the crisis, as they do not have their own clientele established yet. Obviously, all restaurants that have financial commitments to banks have been largely affected by the downturn as well, as they do not have enough current [income] to repay their loans,” Ricardas Maciulaitis, vice-president of Lithuania’s Hotel & Restaurant Association and director general of the restaurant “Medziotoju uzeiga,” told The Baltic Times.

To ease the downturn’s pain, he downsized staff, from 50 to 35 employees, laying off waiters, cooks, dishwashers and a few white collar employees. Since the trendy restaurant is spread out over several floors, in aiming for more efficiency, its administration moved the restaurant’s kitchen, the bar and the restaurant to the same floor, thus eliminating the need for extra bus-boys.

The menu was scrupulously reviewed, prices slashed, and they got rid of the most expensive dishes. “Having implemented all these means, we were even able to increase our sales a bit in 2009. They went up approximately 10 percent, as alcohol sales decreased by 3 – 5 percent. Having in mind that our counterparts struggle to survive, it is quite a good result. We have been seeing quite interesting trends in the business. We do have fewer corporate orders for business dinners. We see a bigger demand for daytime specials, as we have moderately priced them. The costs for daytime specials are considerably lower, as we prepare a larger amount of food. In addition, we witness fewer sales on Saturdays. Our restaurant is business customer oriented, however, and there is a decline in the segment, largely due to the decrease of the city’s visitors. Nevertheless, all Kaunas’ restauranteurs expect much from the anticipated Ryanair operation in Kaunas. It will bring more foreigners, who tend to savor local cuisine. So far, the state tax policy has been very severe to the restaurant business,” Maciulaitis revealed.

Kestutis Markevicius, marketing director of the restaurant chain “Fortas,” claims that the restaurant business is one of the hardest hit by the crisis. The restaurant chain is running eight restaurants serving national dishes, and six other establishments. “We weigh the crisis by the dramatically changed customer behavior, as our clients tend to order cheaper dishes, refuse desserts, cocktails or even coffee. (According to the statistics, coffee sales decreased 19 percent in Lithuanian cafes, restaurants, pubs and other eateries last year. According to the ‘Euromonitor International,’ the average Lithuanian had, on average, 74 cups of coffee in 2008, and this number went down to 60 last year). Obviously, for many people eating out has become a luxury, as many people tend to prepare a snack at home and bring it to work. Those who keep eating in our restaurants tend to order daytime specials and discounted dishes. We have seen a decline in business dining, as dinner specials are on the rise.”

He adds that, “To invigorate sales, we came up with an idea to flavor the cuisines thematically; we started introducing German, Swedish, Russian, Canadian and Polish menus. In addition, in order to shuffle the menu, we have brought into fashion more flavors with the national cuisine, introducing special dishes for Lent or Mardi Gras. Such changes have worked successfully. I have heard that some restaurants, aiming to cut expenses, not only have downsized their staff, reviewed menus, but also diminished dish portions and, at worst, excluded some costlier ingredients, thus, worsening the quality. I am convinced that such saving policies lead only to losing customers.”

According to Markevicius, big restaurant chains have the best chances to get through the economic hardships, as they can manage costs more effectively - centrally, directing them from one office, with no need to have a separate administration and bookkeeping office for each restaurant.

“To put it briefly, I believe that our expansion and the aggressive marketing policy were the key to ensure our growth, even during the recession,” Markevicius concluded. Fortas opened two new restaurants last year.
Gediminas Balnis, director of the restaurant chain “Viciunai” that is running the restaurants “Katpedele,” “Charlie Pizza” and “Carskoje selo,” claims that sales in the chain restaurants tumbled 20 percent last year. The decreased turnover was due to significantly slashed prices, a must-do step in order to retain competitiveness. “I foresee the further restaurant market’s shrinkage, as closing of chic gourmet restaurants and opening of money-saving eateries is on the rise. Low-cost restaurants lost a lot of their former customers, as many low paid people lost their jobs and now stay home preparing meals.

Meanwhile, the upscale customers of more glamorous, chic restaurants move into this void, as they cannot afford frequenting luxurious restaurants any more. Many costly gourmet restaurants have been closed down or are on the brink of survival,” Balnis revealed.

The restaurateur points out the interesting changes taking place  in the regions. “When municipalities started saving electricity and switched off street lights in small towns and townships, local cafes, bars and snack-bars became the only amusement spots for local residents, particularly on weekends. These kinds of establishments have become local cultural centers. This is especially so for our Russian restaurants. We have never seen as many wedding parties thrown in them as now. Sometimes we give three wedding parties at once in the restaurants, as people find it much cheaper to have them there,” Balnis said.

Though restaurant industry experts maintain that the gourmet restaurants are the ones to have been hit hardest last year, some new openings went as planned. “When we were planning the opening, we did not think about the approaching hardships. Despite the cloudy business forecasts, I remain optimistic; the first year since its opening has been very tough. We made certain adjustments when it came to resources. For example, we scratched out many expensive gourmet dishes and brought in more moderate-priced meals,” Gerardas Neverauskas, owner of a new restaurant in Vilnius, said.

Italy’s pizza ambassador in Kaunas, Paolo Romano, has been making pizzas for over fifteen years in Lithuania. The owner of the popular pizzeria claims that the downturn’s affect for his business has been rather mild, as he managed to keep up his clientele. Furthermore, he was able to attract new customers who used to dine in more upscale restaurants before the crisis.
Romano admits to having his own recipe in handling the economic hardships. It includes going back and forth to his homeland for food provisions, since they are several times cheaper there than in Lithuania. “The right price, pleasant service, cozy surroundings and some true Italian flavors are the keys ensuring the steady flow of pizza lovers,” says Romano, beaming with confidence.

Stanislov Kizenevic, president of the association of Lithuania’s Restaurant Chefs and Confectioners, groans over the substantial changes in the restaurant sector, as he claims that the middle class that frequented restaurants is rapidly vanishing. “Before the crisis, gourmet restaurant goers made up 30 – 40 percent of all restaurant clientele, however, now it has shrunken to half of that. Specialty restaurants, particularly, seafood, fresh fish and beef have been hardest hit by the changes in the business. Fresh fish dishes used to be the most expensive in gourmet restaurants, but with demand constantly in decline, many restaurants had to take them off their menus. Now diners opt for potato, macaroni and flour dishes for dinner, as meat dishes are more in demand in the evening. The trends make me sad, as I see Lithuania turning into a country of cheap taverns and eateries. Hopefully, things will change with the economy’s recovery,” said Kizenevic.