Tax Rebates Not Helping Restaurants
My family's federal tax rebate check arrived late last week. It'll help, but I'm afraid we won't be stimulating the economy like the federal government hoped we would by buying a couple of iPhones (though I really want one) or the Alaska king crab special at The Oceanaire Seafood Room (though I drool at the thought). The money will sit in our savings account until it's needed, which is what a lot of folks plan to do while waiting for the U.S. economy to right itself. Restaurateurs, among those whose businesses depend on robust consumer spending, can't be pleased.
According to a consumer sentiment survey released last week by Technomic, a Chicago foodservice consulting firm, 34 percent of respondents will sock the money away in their savings accounts, while 29 percent plan to pay down their credit card bills. Another 23 percent each will shop for necessities and pay off other debts, while only 3 percent said they would eat out more often and only 2 percent would spend more when dining out.
"Consumers are strapped and have other nondiscretionary priorities with respect to the tax rebate checks they will be receiving," says Bob Goldin, executive VP at Technomic. "Unfortunately, it does not appear the restaurant industry will be a beneficiary of the stimulus program."
But Jim Ulcickas, proprietor of three Bluewater Grill Seafood Restaurants in Southern California, isn't fazed at all by the bleak reports and gloomy scenarios. When I wrote in this space a couple of weeks ago that the slowing U.S. economy might hurt seafood and restaurant sales, he responded that smart operators find ways to create value for their guests without lowering their menu prices.
"The point is to make them go away happy and feel good about the perceived value of what they spend," he says, adding that he constantly evaluates each dish, from the featured species to the portion size to the item's presentation on the menu. Even though seafood prices are rising across the board, Ulcickas seems ready for the current economic downturn (no "R" word here).
A little extra money in everyone's pockets surely can't hurt the foodservice industry. But the stimulus program is no panacea, and whether it has the intended impact on the economy remains to be seen. One thing is sure: Now's a good time to examine your business and determine what needs changing and what's worth saving.
For an in-depth look at how the slowed economy is impacting the seafood and foodservice industries, read the Top Story in the June issue of SeaFood Business.