"It's helped," he says, "because now we get people who normally wouldn't come in, people who weren't looking for a fine-dining experience and who frankly would be offended by the prices."
It's the same all over -- to cut prices, restaurateurs have had to find ways to rein in costs. "Every penny counts," Greenspan says. "It's what keeps you in business." He has changed his trash service, bought less expensive paper for menus, shifted staff hours and changed payment schedules. "I make sure the dishwashers run the dishwashing machine only with all the plates in there. There's all kinds of things you can do. You have to make sure the changes you make don't affect the customer."
But as restaurateurs offer deals and discounts, they're faced with the potential double whammy of fewer customers and lower prices squeezing already thin profit margins. The California Restaurant Assn. estimates that net profit margins average 2% to 5%, according to CRA's president and chief executive, Jot Condie, and that's in normal times.
Ongaro claims sales have dropped a stunning 50% from a year ago. "If the moment comes again, I'll serve foie gras, caviar, lobsters," he says. For now, there's pappardelle with lamb ragout for $15 and breaded pork cutlet or Mediterranean striped bass for $20.
Meanwhile, restaurant openings continue. "Believe it or not, there are still opportunities," Condie says, "especially for restaurants that embrace a new business model catered toward value or meals that don't necessarily have a heavy price."
A new boast
It wasn't so long ago that the $40 entree was sweeping the nation. Restaurants now tout that their menus have nothing over $25, such as the new, casual Italian steakhouse Tonys on Sunset Boulevard, which opened this month (martinis are $5). Or nothing over $14, as at the new restaurant Cabbage Patch in, of all places, Beverly Hills. The owner of Bloom Cafe on Pico Boulevard in Mid-City recently expanded and opened Chic Cafe, offering takeout meals that will feed six to eight people for about $40.
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Still, it's a tough environment in what even in the best circumstances has been a challenging enterprise.
John Self, an associate professor at Collins College of Hospitality Management at Cal Poly Pomona who has published a study of restaurant failures, estimates that 1,100 restaurants open in L.A. County every year. Among those, about 24% close the first year, and about 50%, cumulatively, within three years, according to his study. This economy "could double that first-year rate," he says.
"When a restaurant closes, most people just say, 'Oh, it closed,' but behind that is tragedy; someone has lost a dream, maybe lost relationships with friends and relatives, a lot of people have lost their jobs. It's no small thing. But when we recover, the businesses that have made it through will be stronger than ever."