6 Reasons Upscale Restaurants Are Failing

Restaurants are being seriously affected by this economic downturn, especially fine-dining establishments. These upscale places most assuredly have higher rents and food costs than fast-food joints and most corporate restaurants, equating to higher menu prices. So, when the economy takes a dump, fine-dining restaurants are usually the first ones to close– it’s happening all across the country, from Seattle to Denver to New York City. Here’s why:

1) Gotta Have Butts in Seats

A lack of cash flow is the root of the problem for upscale restaurants in recent times. It’s imperative that the reservation book is full in order to pay the rent, payroll, and food costs. When a place sits empty night after night, all that pricey food, which starts to rot, eventually has to be thrown away and the rent goes unpaid. This is the kiss of death for a restaurant. People simply can’t afford $35 entrees anymore. And some folks (enough of them, I guess) don’t understand how a place could charge so much during tough times. But, hey, food is expensive these days, and restaurants aren’t in the business of giving it away. You get what you pay for, like the old adage states.

2) Why Don’t We Just Stay Home Tonight, Honey?

Some recent surveys suggest people are dining out less during these economic hard times, and that is the crux of the issue for failing restaurants: they simply can’t survive if people stay at home and cook for themselves. (An upside to this is that grocery sales are booming. Haven’t you noticed longer lines at the grocery store lately?) These polls also show that people are looking for less-expensive restaurants to satiate their dining needs, which has made for higher sales in the fast-food sector of the restaurant industry.

3) The Never-Ending Pasta Bowl is Killing Good Restaurants

It’s hard to compete with corporate restaurants that offer never-ending this and never-ending that. Let’s face it, places that offer all-you-can-eat deals may be packed, yet do you really want a never-ending bowl of mediocre, at best, spaghetti carbonara? Cheaper never equates to better, especially when it comes to food. But Americans are gluttonous and, apparently, don’t have a very sophisticated collective palate, or the parking lots wouldn’t be full at these ubiquitous corporate Italian places. Try supporting your local, family-run Italian joint if you are craving pasta–at least they don’t cut sauces from bags. And it may help these independent restaurants live to see another day.

4) Chefs Aren’t Known For Their Flexibility

Chefs aren’t very flexible. And I’m not talking about yoga; I’m talking about the fact that most chefs would rather take a carrot peeler to their tongue than dumb-down their food to appease the masses. Since compromise (giving people affordable food) seems to be the modus operandi of the current restaurant business model, places that stay the course with more expensive dining will continue to fail at an alarming rate. There’s definitely a catch-22 going on here because it’s hard to produce incredible fare on a shoestring budget. And most high-end chefs would opt to deliver newspapers for a living rather than serving food that comes from a can.

5) Who Needs Culinary School?

Culinary schools, whether it is the prestigious Culinary Institute of America or a local community college program, are in the business of grooming students to work in contemporary, high-end restaurants–not pedestrian corporate restaurants. This trend hasn’t changed, and it probably won’t anytime soon just because the economy is in the toilet. But where are all these recent graduates going to work if upscale restaurants become a rarity? One good side to this harsh reality is that all these corporate places (that are indestructible like cockroaches) will have highly qualified cooks in their kitchens, which will raise the bar for other cooks with shabby resumes and sloppy work habits. Yet it doesn’t take a culinary genius to cook uninventive, corporate food.

6) I’ll Just Have Some Table Wine

High-end restaurants are a notorious for having expensive wine lists, and this makes for some dusty bottles of wine during bad economic times. Companies (purveyors) that sell wines to restaurants are noticing a change in wine sales–people are looking for more affordable table wines (let’s say, in the $15 range) instead of reserve wines that cost $50 or more. A bottle of wine doesn’t have to be expensive to be good, but, once again, you get what you pay for. Most reasonable wine managers (sommeliers) at restaurants are making a conscious effort to find wines with affordable price points. And those will be the places that make it during tough times.