Art Herzalah, manager of Pork Store Cafe on 16th Street, tore open a sample of napkins and laid one down on the counter. Michael Nader, the restaurant’s owner, looked closely as Herzalah placed it beside one of their usual napkins. To the inexperienced eye, they looked like regular white napkins. To the Pork Store manager and owner, comparing eight-by-five-inch paper rectangles is an exercise in cutting costs.
“Too thin,” Nader said. “People will need to use two, at least.”
For many restaurant owners on 16th Street between Guerrero and Mission, the past six months have been difficult. Food costs have risen. But worried about scaring customers away, owners have kept prices the same. After all, affordable-but-good food is what brings many San Franciscans to the 16th Street corridor. So to keep prices attractive in a recessionary climate, they look at cutting costs elsewhere.
Even the more upscale Bar Bambino is feeling the pinch. “We’ve seen a decline in an average check of 10 to 15 percent,” said owner Christopher Losa.
“People hunt and peck for the menu and make conscious trade-offs as to what they order,” Losa added.
At Monk’s Kettle, bar manager Nick Schuster said he’s noticed that customers are sharing entrees more often.
Tokyo Go Go owner Ray Lowe summed up the nationwide phenomena: “People are more hesitant to spend and we’re more hesitant to raise prices.”
In December, the National Restaurant Association’s performance index hit a record low of 96.4. The monthly index charts the industry’s health, and is based on a survey of its members. Anything above 100 shows expansion; scores below show contraction.
In January, the index bounced back to 97.4, which is good news for the industry. However, it’s still the 15th consecutive month the index has been under 100.
“We’re affordable. We’re not supposed to take a hit,” Herzalah said. But they have.
“The frequency of patrons is down by 10 percent,” Nader explained, “and the ones that do come in are spending 15 percent less.”
A few doors up the block at Pakwan, an Indian-Pakistani restaurant, sales have dropped 25 percent in the last year. Shabaz Mohammad, co-owner, is worried.
“When we opened here in 1995, it was very quiet. We were in recession at that time, but it’s worse now,” he said as he took a break from reading a book at one of the empty tables.
Although Lowe, who has owned Tokyo Go Go for 10 years, didn’t provide specific numbers, he has noticed that more customers are coming for happy hour than dinner.
The same is true for Monk’s Kettle. “Tobacco and alcohol are recession-proof, ” Schuster laughed.
Restaurant owners agreed that the cost of doing business has risen. Gas prices have gone down but suppliers haven’t lowered their prices. Commodities have taken wild swings but are still above last year’s prices.
A year ago, Herzalah bought a 50-pound bag of flour for $8. A few months ago, the price shot up to $22. Today, the price is down to $17.
With chicken tikka masala priced at $6.99, Mohammad’s restaurant offers some of the best deals on the block. He knows keeping prices down will keep his restaurant fuller, so he’s decided to sometimes sell dishes at cost.
To do so, he’s had to cut one or two days of his four employees’ schedules. His two sons also help out on weekends and holidays.
At the Pork Store Cafe, Nader had a heart-to-heart with his team to demonstrate how they can all play a part in making the business more efficient.
“When potatoes are being cut,” Herzalah said, “I want to make sure I’m using every usable part. You weigh it, you put it in a bag and that’s a portion of fries. You can’t control how much you’re going to buy it for. You control what you use.”
His efforts may be paying off because the restaurant is expanding. In mid March, Nader will open the Morak Room, a Moroccan-themed bar (complete with hookahs) which will be used as a waiting room for the restaurant on busy weekends. The bar will also be open in the evenings.
At Tokyo Go Go, Lowe has trimmed hours by asking his staff to come in 15 minutes later than usual. He plans on attracting more happy-hour customers with a “Stimulate Your Appetite” deal this month: $5 drinks and $5 shared plates.
To cut costs, Bar Bambino’s owner invested in a pasta maker late last year. He hasn’t had to lay off employees yet but he is worried about the future.
“If I see another four weeks of the business pace we’ve seen in the last four to six weeks, we may in fact have to make some cuts,” he said.
On a recent Saturday afternoon, Ashley Langworthy and Peter Gleason shared plates of chicken, rice and naan bread at Pakwan.
“Now, if I’m spending more than I expect to it’s less fun,” Langworthy said.
The economy is a chain reaction, Gleason said. If everyone pitches in by supporting the local economy then everyone will be better off.
Sitting at his table, Mohammad said he hopes things will get better by summer. Otherwise he may have to make some tough decisions. Selling, however, is out of the question.
“This is your second wife,” he said, referring to his restaurant. “I won’t sell because I don’t want to leave this neighborhood. This is my first restaurant. It’s touching my heart.”