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Feeding the Holiday Economy

by Courtney Gross, Dec 10, 2007
 

If there is one thing New York has to attract holiday shoppers and tourists from around the world, it's restaurants.

From fusion fare to destination dining establishments, like the Rainbow Room or Sardi's, New York can tickle the palates of residents and visitors alike with fine wines and decedent deserts throughout the year, not just during the holiday season.

More of the city's economy is directed by the ebb and flow of Wall Street, than the waiting list at a meatpacking district restaurant. But for some independent restaurateurs, catering businesses and grocery store owners, the year's final quarter, which includes celebrations from Thanksgiving to New Year’s Eve, is when they do the greatest percentage of their business. Many restaurateurs know a holiday rush, or lack thereof, can make or break their budgets.

Food Fueling the Economy, Not Really

The Food Crisis Elsewhere

While slow sales may dampen restaurateurs' holiday spirit, at the other end of the economy spectrum, a slowing economy is making it difficult for some New York families to put even basic food on the table.

Food-related industries and causes have been struggling this year throughout the city, especially food banks. Late last month just in time for Thanksgiving, the New York City Coalition Against Hunger released a report that revealed one in six New Yorkers lack sufficient food.

As a result of slashed federal funding, food banks have been unable to keep shelves stocked with healthy, holiday goods as they confront increasing demand. More New York City residents are knocking on their door, advocates say, because of an economic slump nationwide.

The city responded late last month with a one-time $1 million subsidy for the city's soup kitchens, but that bail out will not solve the longer term problems of funding at the federal level, advocates said.

It seems getting a table at a restaurant near Broadway may be easier, but getting the necessary subsidized meal from a local charitable organization is becoming more of a challenge.

 

 

 

 

 

The restaurant industry has been flourishing in New York City for the last decade, according to industry experts, which means more jobs and more money being funneled back into city coffers.

In 2006, 222 restaurants opened in New York City, according to the Zagat Survey, adding to the nearly 18,700 establishments citywide.

Though the growing industry is worth about $15 billion annually, according to the city comptroller’s office, dining out or dining in with a caterer does not necessarily affect the city's economy as much as other industries.

" It's not a big industry of itself," said Frank Braconi, chief economist at the city comptroller's office. "It pales in comparison to let's say the media or Wall Street." ( Wall Street is said to account for 20 percent of the city's total wages and salaries.)

Retail sales during December, which includes sales in the food service industry, should account for about 11 percent of the industry’s annual sales, said Braconi, which is 30 percent higher than an average month.

Braconi said about 20 percent of the food service business in the city is attributed to visitors. According to NYC & Company, the city's tourism and marketing organization, about 30 percent of visitor spending will be done in the fourth quarter.

The most popular activity for both international and domestic travelers frequenting the Big Apple is dining out, according to NYC & Company. In 2005, 88 percent of international visitors ate at restaurants, while 59 percent went sightseeing.

What to Expect this Year

Restaurant or retail sales may mean little to city officials - who focus more on the Dow Jones Industrial than on Dolce and Gabbana - but a holiday season slump can mean life or death for the independent business owner or small restaurateur.

" The last quarter of the year is really what determines the annual sales," said E. Charles Hunt, the executive vice president of the New York State Restaurant Association. "You got two months back to back with holidays. People are more likely to go out to restaurants."

Hunt estimates that some restaurants may do 40 to 45 percent of their sales from October through December. This year, he said, because of the Broadway strike (see related story) a lot of midtown establishments may be counting their pennies.

That is certainly the case at midtown staple Sardi's, which saw sales decline between 30 to 50 percent during the stagehand union's 19-day standoff, said Sean Ricketts, the restaurant's dining room manager. Even now that the strike has ended, Ricketts said Sardi’s sales are at approximately 85 percent of where they should be.

Despite the slowdown, he added, he expects business to pick up rapidly in the coming weeks. December usually accounts for 20 percent of the restaurant’s business, he added.

“ Generally the holidays are very good for us,” said Ricketts. “Normally there is a lull in January or February, and the holidays, being in December, really support that lull.”

Though restaurants centered on New York City entertainment, like Broadway, or tourist attractions, like Rockefeller Center, see the holidays as a major boost, other establishments define the holiday season as just another day.

Richard Coraine, chief operating officer for the Union Square Hospitality Group, which includes restaurants such as the Union Square Café and Gramercy Tavern, said they may see an influx of holiday parties, as well as the revenue that comes from a larger party and tab, but sales overall remain consistent throughout the year.

In 2007, Coraine said, sales have been up 10 percent from last year.

“ I think it’s one of the vital components of a New York experience,” said Coraine. “I think the same thing about Broadway. New York has always been the place where you have the best restaurants.”

Supermarkets and Catering

What goes better with buying and giving and family occasions than eating and drinking? Most New York caterers and even local grocery stores stock shelves throughout November and December in anticipation of the holiday rush.

But with the rising cost of food nationwide – due largely to the rising cost of energy and the demand for corn for ethanol– some grocery stores and catering mainstays have been disappointed with their sales so far this holiday season.

Tryg Siverson, executive chef at Balducci’s, the gourmet market and catering establishment in Lincoln Square, said so far this holiday season the store has seen only a 2 percent increase in sales over last year. For the Lincoln Square location in particular, that increase did not meet expectations, especially when Thanksgiving is usually one of their busiest periods.

For a brand name like Balducci’s, that could point to a slowing economy. And for similar establishments, which cater or deal in food completely through retail, profits can become extremely reliant upon the holiday season.

“ The entire six month period prior to Thanksgiving is entirely preparatory for Thanksgiving,” said Siverson. “We spend six months getting ready for one holiday.”

Eat, Drink and Be Wary

Some have not felt the slowdown.

Carl Hum, president and chief executive officer of the Brooklyn Chamber of Commerce, said manufacturers, like Acme Smoked Fish in Williamsburg, have doubled or tripled their shifts to meet demand. The holidays are when people, no matter what borough they live in, spend money, said Hum.

Even if the economy continues to slow down, he added, food will be the last thing to taper off.

“At tougher times, people are not going to buy that diamond bracelet or that car,” said Hum. “But they are going to buy food.”

Whether these holiday profits are spread out equally across the five boroughs and an array of income brackets is unlikely, said industry experts. Manhattan gets much of the season’s hectic rush – the tree at Rockefeller Center, Broadway and a plethora of other holiday attractions. But said Hum, “This is certainly a critical time for all industries in all boroughs.”

It also can serve as a sign of things to come. Economists say shopping trends or how often people dine out can become a decent indicator of the nation's economic stability. If you have the money to eat out every night, one could assume your holiday bonus was as plump as a pumpkin pie. If that trend staggers, then New Yorkers' salaries may be getting slashed or businesses may be cutting more than their Thanksgiving turkey.

We still have three weeks to go before the end of the year, with plenty of time left for holiday parties and nights out at our favorite restaurants. "It's the holiday season and everything's back to normal," said Hunt. "Broadway's back. There may have been some people that missed out that will come out and spend more." 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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