A Menu of New Strategies

Whether you're a chain restaurant executive or you just dine out on occasion, it's clear that the hospitality industry has not been spared from the effects of the declining economy. Many restaurants are working hard to turn challenges into opportunities, however.

Consumers trying to navigate this recession view eating out as a luxury that can be eliminated. Nearly half of respondents to an April BIGresearch survey said they had cut back on dining out within the past month, up 8 percent from April 2008 — and those who still eat out are also finding ways to cut back. Restaurant executives say many patrons are opting to do without appetizers, dessert and alcohol, which is causing the average check to shrink.

A large number of chain restaurants are addressing customers' concerns with deals that include multiple courses for a set price. Applebee's is offering a 2 for $20 special of two entrees and an appetizer. Morton's has featured a $99 dinner for two which includes appetizers, salads, steaks and dessert. Even The Palm is coming to the table with a $19 per-person, three-course lunch for groups of 10 or more.

Other restaurants are promoting smaller portions at a lower price point — good news for customers on a budget and a diet. Cheesecake Factory is offering a small plates and snacks menu, where some items sell for $5; Chili's introduced 10 entrees for less than $7, and T.G.I. Friday's is featuring a handful of $9.99 options.

Restaurants also have been creative in marketing around certain events. For example, dozens of chains held tax-related promotions on April 15. P.F. Chang's offered 15 percent off the entire bill, while McCormick & Schmick's offered a special $10.40 menu. To encourage repeat visits, Chick-Fil-A featured a tax relief special, where customers could bring in a receipt from April 15 within the next two weeks and receive the same order for free.

The recession also seems to be contributing to a bit of an attitude adjustment at some restaurants. Servers are making an extra effort to check back often with diners, managers are making the rounds to ensure meals have been prepared properly and hostesses are taking diligent notes of reservation requests. Even the most exclusive restaurants are relaxing age-old dress codes and offering free parking.

Not everyone is struggling, though. Thriving companies are taking advantage of the downturn to open restaurants in locations shuttered by competitors that have downsized or gone out of business. Buffalo Wild Wings has taken up space in Don Pablo's restaurants, Panera Bread is negotiating to move into former Bennigan's locations, and Burger King has snapped up former Starbucks units. It's the chain restaurant version of musical chairs.

In short, restaurants have done an admirable job of turning lemons into lemonade. As with traditional retail, restaurants that use this environment as an opportunity to try something new will be rewarded when the economy recovers.