IJill has given a very good overview of the environment restaurants and other discretionary income places are going to have to consider going forward--it can't be ignored.
Continuing to do "business as usual" and expect it to 'pick up' come snowbird-spring break-summer tourist season would be at one's own peril.
The economy has taken a hammering (exhibit A: Goofer & My stock portfolios over the last few weeks

) and folks who still find it in their budget to go on vacation will be more apt to cut back on food costs either by cooking themselves or seeking out lower-cost alternatives.
Paying $32 for a tuna steak dinner--that doesn't even include a starter salad--will be shunned in favor of a more "upscale" chain restaurant where that $32 not only includes a salad/soup starter, but with enough left over to include a glass of wine or a dessert. The end product at both places are the same--one walks out with a full tummy, but in one case the wallet is a lot lighter leaving the patron to choose what part of their vacation will make up for the additional cost.
The mind set of the local restaurants must be....
what "value" am I offering these patrons for the additional money they will be spending? THAT is the important question.
A "Buy Local-Flag Waving-Rallying the Troops" campaign may shame some locals and repeat visitors into forking over their money...but it will not nearly have the same appeal to the majority of infrequent and seasonal visitors who are feeling the economic sting of an oncoming recession.
VALUE ADDED is the key. What value do those "other eating places" provide to their customer? What can we do that they do now and what can't they provide that we can? A strategy must include some sort of advertising with menus and pricing (folks are familiar with the prices they pay at the same restaurant chains in their city), people hate to be surprised to find that they have to pay an additional $6.50 for a mixed salad when they purchase a $32 tuna steak dinner. Most definitely service and good food is a must. Local restaurants may also have to rework their menus to provide more "low cost" choices to attract diners: daily prix fix menus, lunch specials that highlight the restaurant's cuisine, and inexpensive but chichi-sounding pasta or chicken dishes to attract a larger customer base. Of course changes like these will cut into the operating margins that we've been used to over the RE boom times; but the difference between staying in business and shutting down is liquidity--that means keeping the cash flow coming in until times get better.
I don't believe this current "rut" the economy is experiencing will be 'all better' by Spring 2008. IMO it is extremely risky for any restaurateur to hang their hat on that sunny outlook. The competition that positions itself to survive when economic times are tough is going to win in the end.
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