Rising food costs. Thinning reservations books. Lower per-head checks. Restaurateurs across Denver are struggling through an economic triple-whammy that’s leaving many chefs and owners more than a little pessimistic.
“I’ve lost customers,” says Martina Esparza, owner of tiny Juarez Restaurant on West 38th Avenue, where carnitas sizzle in the back, and families crouch over hard-shell tacos and plates of nopales in the front. “And the ones that come back, they spend less.”
According to the National Restaurant Association, Denver’s situation is not unique. Its monthly Restaurant Industry Tracking Survey of restaurant operators nationwide showed that 55 percent of restaurants saw lower same-store sales in March 2008 compared with March 2007; only 28 percent reported higher sales.
And in a competitive industry that all but requires blind optimism from its leaders, psyches are also struggling: 46 percent of restaurant owners nationwide expect general economic conditions to be “worse” in six months, versus only 14 percent who expect “better” conditions.
Hitting home
Pete Meersman, president and chief executive of the Colorado Restaurant Association, which is associated with the national group, acknowledges that the dip is being felt in Colorado. “We’re seeing sluggish sales. Customer counts are generally down or staying the same. Fuel prices are not only increasing commodity prices, but they are also keeping customers from driving.”
High-end restaurants may be among the most at risk, according to Meersman. “In general when there is a downturn, the high-end places feel it first, and they feel it the longest. They still get special-occasion business, but do they get that expense-account dinner?”
Meersman is still optimistic though, especially about Colorado. “Colorado is gaining population, which provides some cover for a downturn. People are spending less, but there are more people.”
Food-flation
But a higher census count isn’t doing much for Juarez, where rising food costs are devouring Esparza’s budget. “Rice has doubled,” Juarez’s Esparza says, “and we serve rice on every plate. But as much as I need to increase my prices, I can’t, because I’ll lose customers.”
And they are something Esparza, whose small kitchen caters mostly to families and contract workers in her north Denver neighborhood, can’t afford to lose.
“A lot of my customers have lost their jobs. What little money they do have, they keep for rent and things like that. They don’t spend it here.”
“We are all scared”
Longtime Denver restaurant fixture Mel Master, who operates three higher-end restaurants, is also anxious. “We are all scared,” Master says. “I think the majority of restaurants are feeling it significantly.”
Master cites a particularly noticeable customer drop-off on weeknights. “Some weeks, we might as well be running a weekend business,” he says. “The problem with the restaurant business is we’re in the hands of people coming in the door. We can’t go out and drag people in.”
Chains may be faring better — by a little. Larry Leith, founder and president of Tokyo Joe’s, points to slow, but still steady, growth. “Although we are still seeing positive same-store sales, they are not in the double digits as in the past,” Leith said by e-mail. “We are adjusting by looking everywhere we can to be more efficient, and, yes, we at some point will need to adjust our costs to our customers. We hate that part, but we end up in a corner.”
Is it a recession?
Master, who currently operates three higher-end restaurants, partially attributes the downturn to a collective negative outlook, fueled by the media. Even in Greenwood Village, where Master has two restaurants, wealthy customers are “affected psychologically, just like everyone else,” he says. “Every time you turn on the television, it’s the same story: financial apocalypse.”
Adds Lee Goodfriend, owner and manager of Racines restaurant in central Denver, whose revenue is increasing this year: “You watch these shows, and they say everything’s so bad, eventually people believe it.”
Goodfriend, a veteran who’s been in the business more than 35 years, isn’t heeding the doomsayers. “I’ve watched it go back and forth. People are still going to go out to eat.”
Entrepreneurs tough it out
“Maybe I’ve had blinders on,” says Andy Ganick, owner of the new Berkshire restaurant in Stapleton, which opened late last year. “I started my business plan about four years ago. I wasn’t going to stop.”
Ganick says he’s too busy running the restaurant to think — or worry — too much about the economy. “It’s scary, but I don’t have time to pay attention (to business news). I am here, working, 100 hours a week.”
Meersman sees relief on the horizon, but he’s just not sure how far off it is. “The restaurant business is very resilient. This is not going to last forever.”
But in the kitchen at Juarez, Esparza isn’t thinking about forever. She’s worried about the next couple of months. “I’ve been open since 2001, and this is the worst. I feel that this summer might be make or break for us.”
Tucker Shaw: 303-954-1958 or dining@denverpost.com
