Upscale Restaurants See Weak Sales in March, Mixed Sales for 2007

by Jamie Walden  on Monday, Jun. 2, 2008 12:00 am  

Although some upscale restaurants didn't feel the economic pain experienced by other enterprises during 2007, gasoline price increases this year may have finally caught up with them.

Of 13 upscale restaurants whose receipts were analyzed by Arkansas Business, seven experienced annual declines in revenue in 2007, some of which were as steep as 26.7 percent.

Sonny Williams Steak Room in downtown Little Rock had a virtually flat (down 0.1 percent) 2007 with food sales of $1.96 million, according to tax records of the Little Rock Advertising & Promotion Commission.

Trio's Restaurant & Catering, with a 6.3 percent increase to $1.69 million in 2007, inched its way closer to Sonny Williams. Brave New Restaurant sold $1.46 million worth of food in 2007. Several other restaurants experienced double-digit percentage growth in 2007. The A&P records do not include alcohol sales.

But (and you knew that was coming), March 2008 numbers tell a different tale. Of same 13 upscale restaurants, 11 experienced revenue declines in March 2008 compared with 2007 ranging from 11 percent to 34 percent. (See table.)

So Restaurant-Bar took the hardest hit, its revenue falling 34 percent in March 2008 compared with March 2007.

General Manager Tomas Bohm attributed some of So Restaurant's decline in sales to "an unusually long honeymoon" phase since the eatery opened in July 2006.

"A restaurant like So is basically kind of one of the first things to go off of people's budgets," he said.

Delivery charges and food costs have soared during the last year, forcing restaurateurs to eat into their profits or pass the inflation on to the consumer. Bohm estimated that grocery expenses have grown by between 10 and 15 percent.

"There's some things that are very extreme. There's some things that are not," Bohm said about higher grocery prices. Although beef hasn't really fluctuated, the price of a case of 30 dozen eggs has grown from $25 to $45, he added.

Bohm has tried to weather the storm by offering more affordable specials, but the costly ingredients of upscale dishes leave little latitude for downward pricing.

The harsh reality is that diners are just not coming as often, Bohm said. And when you can't get people in the chairs, affordability is irrelevant.



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