The gloomy restaurant market brought out a bunch of innovative entrepreneurs

  • 2010-10-27
  • By Linas Jegelevicius

BRINGING MORE TO THE TABLE: Restaurants are offering extras to entice business, including good, old-fashioned service.

Klaipeda - While grumpy entrepreneurs’ beat about insane tax policies and business-crippling incumbent government’s decisions, restaurateurs chime even louder over small restaurant customer numbers like never before, citing little tips and the overall deteriorating situation in the business. While other undertakings ponder feeble signs of recovery, restaurant owners keep complaining about further worsening of the situation in the sector. “Regrettably, there is no good news so far. I can hardly call good news the fact that restaurant turnover has tumbled this year not as dramatically as the previous year - down 18-20 percent versus a whopping 30-40 percent plummet last year.

Obviously, we are far from bottoming out. Frankly speaking, I just don’t see any leveling-off around the corner,” Egle Dilkiene, executive director of Lithuania’s Hotel and Restaurant Association (LHRA), admitted to The Baltic Times. According to her, all restaurants seeking to stay afloat were forced to implement certain readjustments, like downsizing their staff, searching for low cost stock suppliers, reviewing their menus and scratching out costlier items from them - switching from luxury cuisine to moderate-priced fast-food-like dishes and focusing on discounts.

“Those that have not done that are closed or being closed down. Particularly new restaurants have been hit hard by the downturn, as they do not have their established clientele. Certainly, all restaurants with burdensome financial commitments to banks have been largely affected by the crisis, as they are low in current assets to return their loans,” Dilkiene emphasized. She suggested that the Association does not possess exact data on the crisis’ aftermath – foreclosures and bankruptcies. “Restaurants, unlike hotels, do not provide us with information on their performance, particularly when there is nothing to brag about,” the LHRA executive director pointed out. According to her, some trendy restaurants facing fierce competition have employed creative measures, arranging thematic evenings, staging various games and advertising public wine or food tastings. “With the overall downturn and murky mood, some venues have managed to show much robustness that apparently pays off,” Dilkiene maintained. 

Evaldas Masalskas may be one of those exuberant restaurant entrepreneurs doing wonders. The successful restaurateur, who agreed to share his experience with The Baltic Times without revealing his identity, excusing himself “there are too many jealous people out there,” he rebuffs about the whiners, claiming it has become convenient for many to blame the downturn and the government for all business misfortunes and personal mismanagement

“Obviously, we cannot deny some unfavorable factors out there. During the crisis customers review their consumption expenditure basket and get rid of some luxury items, including lavish dinners at a local restaurant or cafe. However, catering remains an essential demand for most people, as only the most crisis-stricken people holed themselves up in their kitchens. Certainly, the downturn has ill affected the whole restaurant industry, but it is far from the truth that the business is doomed to crumble.

For me it (the crisis) meant that competition has grown dramatically for luring in customers. Alas, some restaurateurs, I have to admit, have done nothing in order to attract more clientele to their establishments. I do not feel like boasting, but for me the crisis was just another challenge I had to deal with – some natural economic phenomena with its threats and its own possibilities,” Masalskis pointed out. In order not just to stay afloat but also to chip off a bulk of the adjacent restaurant’s clientele, he had assumed several steps that have lead to his venue’s prosperity even during the panicky times. “In Lithuania, before the crisis, many restaurateurs, as a rule, would complain about poor service in their restaurant and cafes. It was due to ever-swapping restaurant staff and a lack of real professionals, particularly waiters.

The crisis to me served as a wonderful possibility to shake up the staff, enabling to lay off those who were too sluggish and lazy, replacing them with ambitious, sincere, hard-working and cheerful staffers. Quite honestly, there were too many random and unwilling to improve people in the business before. Having reshaped the team, in order to keep it vigorous and motivated, I came up with a new salary-motivating system, relating the pay with the restaurant’s sale results, as well as becoming more attentive to my employees’ needs, ultimately, personalizing the boss-employee relationships. It comes to what you are ultimately striving for – employees’ loyalty to the business and customer satisfaction,” the entrepreneur emphasized.

 The second thing that he has embarked on while in a hunt for new clientele was in effect to always surprise his clientele. “From my experience, you cannot just count on the same thinking process, “People know us and that is why they swing by. People will likely show up again once they are pleasantly surprised. Instead of going for a traditional surprise, like “2 for 1”, we came up with some new ideas to cheer up our customers. For example, arranging a quick lottery, quiz and rewarding the winner with a lavish dessert, or arranging thematical flavored nights, tastings, concerts, etc..

Thus,  we started introducing international cuisines to our menu. In addition, in order to shuffle the menu, we have brought more flavors with our national cuisines, introducing special dishes for Lent or Mardi Gras. Such menu changes have worked quite successfully. The bottom line is customers need to see reinvented menus. And customer service costs barely nothing, but it pays off … a bigger turnover in the long term,” Masalskis pointed out. To waste hundreds and thousands for pricey advertising makes no sense if you cannot satisfy your customers. When advertising our restaurant, we have employed new means, for example, establishing fan forums on popular social Web sites, sending out hundreds of e-mails about new dishes to our most loyal customers who have shared their contacts with us. Recently, we have introduced our restaurant’s new Web site, allowing customers to see daily menus, specialties and even peek at a live cam, to see what goes on in the restaurant,” the restaurateur related.

However, even with the novelties introduced, Masalskis acknowledges, the business experienced a 25 percent slump last year, while it is about to level-off this year. “No doubt, the last years have been really bad for business, but it would have been much worse if we had not done anything. While a handful of restaurants have left the stage, we are not just clinging on, but creeping forward,” the entrepreneur confided.

However, the situation in the restaurant business varies from one establishment to another, depending on numerous factors including seasons and location. Restaurants in Palanga, a resort town in the West, struggle with the off-season’s reality – how to survive it. Monika, a trendy cafe in Basanavicius Avenue, employs only nine staffers in winter, a number down by double compared with summer. “In the summer we do a lot of catering to numerous events and venues, but winter in Palanga is very sluggish. I understand that laying-off is a painful thing, but it must be done. Tips are also considerably less in winter,” Feliksas Pakutinskas, Monika’s owner, said.

Voskan Aivazian, originally from Armenia, runs the trendy restaurant Alka in the resort town of Palanga. Always cheerful and upbeat, he is obviously saddened when asked about the past high season. “Despite eye-catchy discounts on most dishes, many vacationers preferred dining at home. I have never seen so many customers in all the local food supermarkets as this summer,” the Armenian restaurateur acknowledged to The Baltic Times. “Most people would come in only during dinner hours and, after a thorough scrutiny of the menu, would order table d’hote dinner, which costs ten litas and ninety cents (a little bit over 3 euros).

“If it were not for well-to-do Russian vacationers who lavished money on elaborate pricey meals and drinks, I would be considering changing my occupation this fall – looking for some activity with less headaches,” the restaurateur joked. In order to better cater to Russian speakers, he shuffled the menu a bit, introducing several Russian meals and urging his wait staff to be fluent in Russian. “Being fluent in foreign languages, waiters benefit most themselves, as customers tend to hand them handsome tips,” Alka’s owner defends his policies. Strangled with the burden to slash restaurant-running costs, he has employed all his family in Alka. “My wife is the chef.

If we hire another cook, it would be even tougher in terms of finance. Being keen on cuisine, I help her, and our daughter gives her a hand during the high season. We have not had a vacation for the last two years, but that is the least thing we worry about. Our current concern is how to make ends meet in the off-season. Our restaurant organizes many banquets in the winter, as well as catering for functions, which we heavily rely on in the winter months. If not for them, we would be in a considerable loss in winter,” Aivazian admitted.