Writing on the wall for kosher eateries?
The recession is hitting the supervised restaurant scene, and some diners’ favourite establishments could disappear.
One of the scariest statistics for restaurateurs over the past few weeks must have been the rise in the sales of televisions. People hit by the recession are planning to stay in a lot more in 2009, and are sorting out their domestic entertainment accordingly. When finances are tight, people start to cut back on going out - and that includes visiting restaurants. So is the kosher dining industry, which has always struggled with high costs and consequently higher prices, about to feel the chill of the economic downturn?
There are currently 60 licensed kosher restaurants in the UK. Of these, 53 are in London, five in Manchester, one in Bournemouth and one in Leeds. In London alone, there has been a net increase of 17 restaurants since 2005. Only four have closed down in the past 12 months. However, there is a feeling among kosher restaurant owners that the market cannot sustain the number of restaurants currently trading.
Phillip Pell, the owner of Chinese restaurant Kaifeng in Hendon, north-west London, feels something has to give. “Our recession started before anybody else’s,” he says. “There has been over-capacity in the market for a couple of years. If places begin to shut down this could have a regulating effect, but it’s still going to be tough.”
Kaifeng, founded in 1986, weathered the recession of the early 1990s but Pell has noticed a few differences this time around in terms of who is still eating out and the types of customers which have disappeared. He explains: “A restaurant is an instant snapshot of the economy. It’s something that people are able to switch on or switch off immediately. If they have made a lot of money, closed a deal or received a bonus, their instant reaction is ‘let’s go out for dinner’. In hard times, this is the first thing they stop doing.
“In the 1990s we lost our property guys and people in the fur trade but kept professionals like doctors, lawyers and City workers. This time, it’s much more even. The City people are coming in far less. Everyone seems to be suffering.”
Keeping his loyal customers is the key for Pell. He illustrates the tiny size of his potential market. “We have a photo on our wall of each of the 16 people who won a 100 per cent discount in our scratchcard promotion last year. When people are getting their coats, they look at these photos. So far only one person has not recognised anyone on the list.”
In using special offers and discounts, Kaifeng is following a proven strategy, says restaurant public relations and marketing expert Stuart Singer of MyJam Communications. “Most restaurants neglect basic marketing skills and in times like these they become the only way a restaurant can communicate with its customers.”
He also advises restaurants hoping to beat the downturn to cut costs which do not add value, and to offer deals to lure diners - while being careful not to cheapen their brand.
High running costs exercise Kenneth Arfin, the owner of the upmarket Bevis Marks The Restaurant in the City of London. The downturn has had no effect in terms of customers through the door, but there are other difficulties for Arfin to cope with.
“We have just had our busiest December in the five years we have been here. However, restaurant margins are low and in the kosher industry they are even lower. Basically our costs are double on a lot of items yet we cannot charge double the price. Costs are even higher at the moment. The pound is weak against the euro and the dollar and overheads are also high. However, because of the recession we are not able to pass costs on to the customer — we have to absorb them ourselves.”
The weakening pound may be pushing up costs but Singer feels that it might also provide a boost, particularly for restaurants like Bevis Marks in the centre of town. “Because other currencies are strong there may well be more tourists this year, particularly in central areas. Operators in the outskirts will be vulnerable, however.”
While kosher establishments would welcome kosher tourists from abroad, owners realise that they cannot rely on passing trade. Daniel Urinov, the owner of three restaurants in north-west London — Aviv and two branches of Met Su Yan — feels that the kosher niche is both an advantage and a disadvantage. “In the mainstream trade, if customers have a bad experience and don’t come back, a lot more people are still going to come your way. In the kosher business we have a relatively small clientele. Unless you have loyal customers, there is no way you will survive. The flip side of that is that if you can build a solid customer base, your business should be able to weather the hard times. There is also the fact that Jews are not big drinkers, smokers or gamblers. We don’t go to bars and clubs so much. The one thing Jews love to do is eat out and I have found that times have to be really bad before they stop doing that.”
But he does predict hard times ahead for those who do not get the basics right — good food, good service, competitive pricing and a pleasant ambience. “Bad restaurants will suffer. If you drive around the kosher restaurants at night you will see that it is always the same ones which are busy. We make it easy for people to budget. Our set menus mean people will know more or less what they will be paying before they step through the door. There are no unpleasant surprises.”
Singer agrees that set menus are the way forward. “Since November, restaurants have seen a marked decline in customers, leaving many restaurateurs around 10 to 15 per cent down on turnover from previous years. Generally the credit crunch is teaching people to be more frugal with their money, to stop lavish spending and to choose from the cheaper set menu and house wine rather than expensive à la carte. The first three months of this year will be the acid test.”
Michael Issler, owner of JS restaurant in Prestwich, Manchester, agrees that things are “a bit quieter” but adds that people are still eating out. “Overheads like gas and electricity are up but I can’t adjust my prices to compensate — the market wouldn’t bear it. The key is always to try to innovate.”
While JS innovates, Aviv Avital, owner an empire in north London and Hertfordshire which includes the Orli chain, the Hendon Bagel Bakery, Bistro 86, the Burger Bar and the Kyoto sushi restaurant, is doing his best to attract customers while cutting costs. “Everyone has more worry and less money. We are doing special prices and special offers but it’s not easy. It’s not worth importing any more. It used to be cheap to import and expensive to produce. Now with the labour market here it’s going to be very cheap to produce and very expensive to import. You don’t want so many staff. It’s a time to survive.”
As for the coming 12 months, none of the restaurateurs expects things to be easy. Pell is bracing himself for “a rotten year”, Avital sees 2009 as “a time to survive” and, as for Urinov, he is hoping a higher authority will step in to safeguard everyone’s future — and he is not talking about the Bank of England. “I try to be an observant Jew,” he says. “You try to do your best. Then it is for God to decide what happens.”