Pricey Steakhouses Offer Recession-Era Deals
Even if some economists say the recession is over, top-line restaurants in Walnut Creek and Danville know customers are looking for value.
Edy Hayashi-Mack of Lafayette says she considers her family's dining choices judiciously; maybe every other Thursday the family goes to salad-bar chain Fresh Choice. But when it comes to a special occasion, they go out for a steak.
Walking out of Ruth's Chris Steak House in Walnut Creek on a Sunday night with her three children, husband and mother-in-law, Hayashi-Mack doesn't seem to have buyer's remorse.
"We feel like it's worth it, no matter what the cost," she said.
During the recession, steakhouses have managed to keep diners such as the Macks, but the "it's-Tuesday-and-I-don't-feel-like-cooking" customers have fled.
And even though the recession has been declared over, trying to capture this customer still will drive steakhouse chains to create deals.
"When you are at the top of the food chain, you are impacted a little more quickly and a little longer," said Kevin Gordon, general manager of Forbes Mill Steakhouse in Danville. Like Ruth's Chris and Fleming's Prime Steakhouse & Wine Bar, Forbes Mill has added door-opening enticements that it never would have considered, including Sunday, Monday and Tuesday specials and happy hours.
"We never had those things before," said Gordon. "There are other competitors so we have to be cognizant with price points. People are trading down."
Business at steakhouses -- with their swanky booths, wall-to-wall wine ranks and a la carte creamed delicacies -- is down across the nation. Frank Klein, a Palo Alto-based restaurant consultant with 25 years experience, said suburban eateries are surviving on name recognition and creative menus.
"Suburban areas generally have restaurants with high brand loyalty so the chain steakhouses can do well if they respond to the economy, and the independent steakhouses can be flexible with their menus, which helps drive traffic."
Wine and appetizers have driven the traffic for Fleming's Prime Steakhouse and Bar, which opened in 2007 on Mt. Diablo Boulevard. Michael James Martin, Fleming's operating partner, says national marketing kicked in the first day of September 2008.
"What really got us through this economy is our marketing department. They put forth some real values, not just gimmicks."
Suddenly, an $18 appetizer was $6, and a $12 to $16 glass of wine was $6, Martin said. Wine-pairing dinners running about $100 dropped to $45, and every Thursday customers could taste 20 of Fleming's 100 wines by the glass for $25.
One such customer, an unemployed contractor by trade and backyard winemaker by passion who didn't want to be identified, was lured in by the Thursday tasting and attractively priced ahi tuna appetizers.
"I've just had to find more creative ways of dining," he said about dealing with unemployment while eating well.
He hit the creative jackpot. During one such tasting, he received a special invite to a wine-tasting dinner.
Creative Meal Deals
Bundling is a popular trend with steakhouses to offer variety at a satisfying price point.
Ruth's Chris: In the main dining room, a starter appetizer, choice of three entrées -- including a 6-ounce filet -- and a choice of four sides and a set dessert special has been running since spring 2008 at $39.95. General Manager Brian Walsh says ordering all these items separately would cost about $70. Forty percent of all entrees sold at the restaurant are purchased under this deal, he said.
A 10-ounce Prime Burger for $9.95 is another menu item introduced during the recession.
Fleming's:
Every quarter, a special is concocted. For September, the Memorable Meal is filet mignon, seared ahi tuna and a lamb chop on a single plate with salad, sides and a dessert. Price is $49.50 for one diner and $99 for two.
Forbes Mill:
Three-course Prime Rib Dinner on Sundays and Three-Course New York Strip on Mondays for $29.
Creative Pricing?
While Klein said the best value is the 10-ounce Prime Burger at Ruth's Chris, he said the others can be perceived as deals because of the variety of food rather than the value offered.
"A restaurant's special is only successful if they fulfill the illusion of the price/quality/value ratio. If a customer takes the bait on the special and in the end feels they were rewarded for their choice, then it's a win-win. Consumers are more savvy today and I think have a better feel for what is a deal and what isn't."
He takes the Fleming's September "Memorable Meal" special as an example. With the proteins at 5 to 6 ounces, Klein calculates the filet costs the restaurant $9 because it can use some waste and trim in other offerings, the lamb chop $6 and tuna $5, for a total of about $20. With the starters and sides, he estimates $12, bringing the cost to the restaurant to $32. If you divide that price by the $99 advertised for two, it's 32 percent, well below steakhouse standard cost.
"So in this case, perhaps the special is really the fact that you can share a well-prepared variety of items and some seasonal vegetables and get an inclusive meal for less than $100," he said.
Steakhouses would be smarter, Klein says, if they would simply discount instead of bundle.
"Like when a restaurant says they are offering 25 percent off all steaks if you dine before, say, 7 p.m. Then you know you are getting a price-specific actual menu item the restaurant normally serves at a higher price," he said.
However, the deals seem to be working. While restaurants weren't specific about profits during the recession, anecdotally they are filling tables. On a Sunday night at Ruth's Chris, its lounge, where customers were ordering heavy meals with their cocktails, was elbow to elbow.
Fleming's Interactive Wine Dinner, at $125 a ticket, filled a private dining room on a Wednesday. Customers could learn about wine and food pairings with Fleming's executive chef Russell Skall on live video conference.
"It stemmed the flow of a drop in business," general manager Walsh said of Ruth's Chris $39.95 special, recognizing that this isn't San Francisco, where business-expense accounts pick up the tab. "In our market in Walnut Creek, we are in a community where we depend entirely on people who live and work in the area."
Editor's Note: If you're a fan of Vic Stewart's, we didn't forget about Walnut Creek's other high-end steakhouse. Our writer put in three calls to the owner but never heard back. If Vic Stewart's has deals it wants readers to know about, let us know and we can add it to the story.
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12:03 am on Saturday, September 25, 2010
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