The Recession Busters

How industry experts are weathering the economic downturn.

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I was researching this article—on how the economic downturn is affecting the food industry—when I got my own news of a 30 percent pay cut. There was nothing to do but shrug and keep writing—maybe consider a proofreading job on the side.

Then I talked to a street vendor who couldn’t pay his credit card bills. I was already building the neat chart in my head of tips and tricks he might give me for luring customers or keeping better track of inventory. I said something like, “So, how are you coping with the current economic crisis on a practical level?” There was an awkward pause. “Look,” he said finally, his voice breaking, “I don’t know. I’m in serious trouble here. What am I supposed to say?”

If street vendors are struggling, so are those who run, supply and work for real restaurants. The food news and gossip site Eater.com counted 46 closings of note in January alone, and those were just the ones they knew of from reader tips and press releases. While there’s no hard government data yet on closings or loss of sales, says Chuck Hunt, the executive vice president of the New York City chapters of the New York State Restaurant Association, “the majority of restaurants have seen a decline. Some say 40 percent, others say 10 percent, others say 20 percent,” he says of gross profits in recent months. “One of the challenges we face,” he adds, “is that a restaurant purchase is a discretionary purchase and customers have a viable option.” It’s not likely you’re going to make a pair of shoes, he means, but you can go home and cook dinner.

In fact, dozens of mid-size to large places have already shuttered their doors, including successful chains like Mangia and Au Bon Pain and restaurants like the brand-new Bloomingdale Road, the legendary Rainbow Room Grill and Fiamma. Following the lead of other restaurant groups, B. R. Guest, one of the city’s most successful restaurant management companies, decided to turn the restaurant, which was given three stars in a recent New York Times restaurant review, into a full-time event space.

So how are food business owners dealing with the financial changes? I spoke to four veterans of the New York City food world and the city’s financial ups and downs—a restaurant owner, a Greenmarket farmer, a supplier of fine foods and a lawyer with restaurant clients—to get their decades-old view on the downturn.

Alex Von Bidder, owner and manager of the Four Seasons Restaurant, has seen the place through several decades of good and bad economies. While the highs don’t last forever, he says, neither do the lows: “We forgot that everything goes in cycles. We got used to things being easy. Right now it feels like somebody has turned off the faucet and everyone is waiting to see what happens next.”

Von Bidder remembers years ago sitting at the hotel bar with James Beard and Mimi Sheraton questioning whether people would pay $1 for a martini. Answer: They would. His point is that people have long been worried about the rising price of dining; in fact even his well-heeled customers are searching for deals, like their $59 prix-fixe 50th anniversary menu, featuring many of the same seasonal American dishes Four Seasons served half a century ago when no one talked about farm-to-table. Like other successful long-term restaurateurs, Von Bidder follows the principles of what he calls “Swiss management,” which means not spending everything you make, and socking away money in the good years for the bad ones.

Meanwhile, if there’s one benefit from people eating fewer restaurant meals, it’s that they might be cooking at home more often, says Fred Wilklow of Wilklow Orchards, whose family has been farming near New Paltz for six generations. His family brings in fruit, meat and vegetables to many city Greenmarkets, and he’s noticed more non-restaurant customers even in the colder months of late winter and early spring. It’s an uptick he’s seen before in the city, when jobs are lost and people don’t feel as flush.

“When we have harder economic times,” says Wilklow, “people come to the market more because they’re not traveling on weekends or going out to eat as much.” And he thinks he’ll see even more customers when the weather warms, even if people are a little more “price-conscious,” as he puts it. “Heirlooms won’t sell as good as regular tomatoes, but I still think that people will be at the market more.”

These days the man New York Magazine nicknamed “the Truffle Tsar” is also looking local. John Magazino, owner of Primizie Fine Foods, procures hard-to-find European ingredients—like enormous and expensive white truffles—for high-end restaurateurs like Daniel Boulud, David Chang and Michael White, and worked for many years for Chef’s Warehouse, a company that supplies most of the city’s top restaurants with gourmet goods.

“The economy’s gone south,” he says, “but at the same time we’ve started to see an increase in the quality of domestic producers, which saves us all money and is great all around.”

Magazino built his business importing rice and legumes from Italy but has made the effort to find the same foods on this side of the pond. “In our heyday, we used to fly fresh produce in from Paris and Northern Italy—salad greens, asparagus, mushrooms, whatever the chefs wanted. Now we’re developing a seed program so a farmer upstate custom-grows the same high-end produce. Chefs tell him what to plant and it’ll be delivered right to their door. We’re always trying to lower price, but we’re never going to lower our quality.”

David Helbraun, a lawyer with a lot of restaurant clients and a background in the business (he used to own cafés), says he’s spending more time in real estate courts. Clients who signed leases four or five years ago when the market was at its peak are having a hard time making rent—their number one expense. “Some clients are saying ‘Look, I’m a good tenant and everyone’s down right now. Cut the rent for X number of months to get me through this, and we’ll put it on the back end.’ Landlords don’t want an empty space.”

Helbraun says a few places have been really successful. But meanwhile, how do they keep their customers? “Generous portions and non-fussy foods,” he says. “The good places will [offer] a prix-fixe or a two-for-one deal on drinks,” says Helbraun. “What they’re really saying is, ‘Look, these are really hard times. Let’s work together to weather this storm.'”

Tejal Rao is North London-born, Red Hook-based and drives a pickup truck. She writes for Gourmet.com and Time Out New York.

Photo courtesy of F.G. Cooper, U.S. Food Administration

 

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Tejal Rao spent formative years in a hard-to-pronounce French village called Saint-Cyr-sur-Morin and moved to Atlanta as a teenager. She is still haunted by the face of the man at Customs who seized her homemade terrines in the summer of 1998.