Economic anecdotes from SF restaurants

The macroeconomic climate of a global marketplace is on everyone's mind these days, including small business. On Friday evening I had drinks with owners of two well-known restaurants in San Francisco. Our conversation turned to business, marketing, and what changes (if any) are occurring within the service industry. In this post I will share a few trends observed in the front lines of the San Francisco food and beverage industry that may apply to broader business.

More diners in 2009

The total number of diners is up year-over-year. People are connecting with friends over food, often bringing small groups into restaurants. Splitting plates has become more common, as have split bills paid with a credit card. Tips are increasingly paid with a credit card as well, leading to more income tax reporting for the recipients.

Menu options

Restaurants have introduced new menu items targeting diners at both ends of the price spectrum. Wine is available as a taste, glass, or bottle in 75 mL, 150 mL, and 750 mL portions respectively. The "taste" offering is becoming more popular and sometimes leads to additional beverage purchases.

Popular dishes are sometimes offered in smaller portions to encourage a food purchase from the bar or more casual customers. Restaurant owners I have spoken with view this method as a hook towards repeat visits.

Daily or weekly specials have proven a good way to extract additional revenue from the high-end of the price band. Rib-eye steaks, a catch of the day, or rotating dessert specialities encourage a spending stretch for special offerings.

Partnerships with San Francisco's Visitors Bureau on prix-fixe offerings was unpopular with the owners I spoke with. Partnerships with media outlets or trade associations around a particular featured ingredient has worked well (e.g. celebrate the month of bacon).

Personnel

When given the choice between hiring more people or working more paid hours the staff has taken the additional hours. Restaurants hiring new staff have been overwhelmed with applicants for both cooks and servers and pleasantly surprised with the quality of talent.

Lessons for web companies

Pricing tiers extract revenue from different classes of self-service customers. Get Satisfaction and 37signals have shown good iterations over this concept.

Advertise special options for larger customers. "Pro" or "custom" customer levels can attract the big deals and bigger spenders.

Communication between managers and staff addresses uncertainty. They are the experienced workers adding value to the business and possibly cutting costs.