Smart operators overcome challenges of fewer customers, revenue swings

Operating full-service restaurants of any kind is not an easy way to make a living, but restaurateurs in locales where their business can fluctuate wildly with the seasons face even more challenges than most.

From the Eastern shore to the desert Southwest, restaurant owners in seasonal tourist destinations have learned how to juggle major business swings. Why do they do it? Being able to live in a highly desirable place makes the challenges worth it, they say.

In the scenic, friendly town of Waterbury Center, Vermont, Michael Kloeti, chef and co-owner of Michael’s on the Hill, gave up the urban life in Manhattan to settle into a community that reminded him of growing up in a small town in Switzerland. “I like that people know me, and I know them. People take care of each other,” he says.

Even though his business drops about one-third in the slowest months of November and April, when there are neither leaves nor snow to attract tourists, Kloeti stays open year-round. He credits keeping opening costs and ongoing overhead in line for his ability to stay in business for the past 10 years.

“A lot of people make the mistake of putting too much money into renovating. I did minimal renovations. You have to look at every dollar spent,” says Kloeti, who researched the local market by working for another restaurant before opening his own restaurant in an existing location. By following his carefully itemized financial plan and doing many renovations himself, he and his wife, Laura, kept the business profitable.

During the slow months he hasn’t needed to cut staff or their hours. “There is enough local business to at least pay the bills, and I don’t lose the staff. We break even and wait for the tourists to come back,” he explains. Many staffers do take vacations when business is slow.

He does, of course, reduce food costs then and eliminates waste even more than usual. “You just have to hold on tight,” Kloeti says.

Unlike Michael’s, some restaurants located in summer tourist areas, especially those on the Atlantic Ocean, do close for a few months in the dead of winter. Most of the restaurants on Martha’s Vineyard, Massachusetts, for instance, close from late October till Memorial Day, including Chilmark Tavern.

“We do intense business in a short period of time and have to do the right pricing to be profitable,” says proprietor Paul Petersiel. “It’s a very busy restaurant.”

Petersiel’s other restaurant, Red Rock Bistro in the Boston North Shore suburb of Swampscott, is open year round but also has its seasonal swings. “The challenge is to put enough nuts away for the winter,” he quips.

Controlling costs is crucial to both restaurants’ success. A leading money-saver is running his own trucks to such suppliers as the Boston wholesale fish houses and produce market. Buying direct removes some of the markup.

The Grand Hotel on Mackinac Island, Michigan, celebrating its 125th anniversary this year with the founding family still operating the resort and several restaurants, is open only from May through October. “You have to be full when you are open with 90 to 95 percent occupancy to survive,” says spokesman Ken Hayward, or about 900 guests per night.

“It’s not a great model for success, but it’s worth it,” Hayward says. Adding to the expected staffing challenge is the fact that no cars or other vehicles are allowed on the island. All supplies are delivered via ferry and horse-drawn drays.

The company recruits staff from all over the U.S. and from international foreign worker programs. Many workers return year after year, keeping turnover at the fairly low rate of 50 percent, Hayward says.

Breakfast and dinner are included in the room rate, guaranteeing business for those dayparts in the main dining room. The dining room and five off-site restaurants are open to nonhotel guests, too.

The recession primarily affected wine sales, with many guests making lower-priced selections than in previous years, Hayward says. “The average ticket went down,” he notes.

With special events and promotions planned to celebrate the anniversary, Hayward expects the 2012 season to go very well, and adds that 2011 was better than the past few years.

Another seasonally challenged Upper Midwest resort area, Door County, Wisconsin, sees many restaurants close after fall color season. A few, such as the Inn at Kristofers in Sister Bay, stay open year-round to service second home owners and winter sports enthusiasts, such as cross-country skiers.

The dinner-only white tablecloth restaurant closes on Tuesdays during the slower season but otherwise keeps hours the same, says proprietor Chris Milligan. In business for 19 years, he credits repeat customers who like to return to their favorite restaurants for his longevity.

He has been able to keep most of the same staff for the past 14 years, all of whom were born and raised in Door County and enjoy the community’s lifestyle. Staffers will trade hours during the slow times to suit their schedules.

Some restaurants in the high-end ski resort of Telluride, Colorado, close during the slowest seasons, which are fall and spring. Eliza Gavin, chef/owner of 221 S. Oak in downtown Telluride, closes for a total of four months, from mid-April to mid-June and from mid-October to mid-December, but does well in the summer, when major music and film festivals, as well as hiking, mountain biking and other outdoor activities, bring in a sizable number of out-of-towners.

“I would lose more money if I stayed open year-round,” Gavin says. “It works very well and is a great opportunity for the staff to travel and do other things.” Almost all of her staff returns for each season.

Gavin keeps the restaurant open during a January lull and gears up for high season, from the February President’s Day weekend to the end of March, when she usually does at least 700 covers a week, compared with 300 in the slower seasons. In summer, she offers Sunday brunch in addition to dinner.

Travelers from cold climates who prefer desert warmth to mountain snow in the winter bring additional business to restaurants in places like Palm Springs, California, from January through April. Local restaurateur Mindy Reed of Zin American Bistro and Zini Café Mediterrano says her seasonal fluctuation has improved to about a 15 percent dip in summer. She credits second-home owners and summer tourists from Europe for the upswing.

Also, her moderate prices have benefited her restaurants, especially during the economic downturn. Still, her dinner check average in summer of about $31 is quite a bit lower than her $45 average during the winter season. She targets the local market in summer with a lower-priced prix fixe menu and half-off on many wines.

Janos Wilder, chef and co-owner of three restaurants in Tucson, Arizona, also targets the locals in summer. Among his promotions are a live music series with dinner at J Bar, a four-course tasting menu of 12 items at Janos and a globally inspired frequent diner program at Downtown Kitchen & Cocktails. “They’ve been extremely effective,” he says.

Business can drop between 30 and 50 percent in the desert heat of summer, especially at the fine-dining Janos, says Wilder, who opened that restaurant 29 years ago. “We know this will happen so we budget accordingly and put as much money away for the summer as we can to cover our losses,” he says.

He opened the casual Downtown Kitchen & Cocktails in October 2010 after the recession began to affect tourism and peak business at Janos. Improvements to the downtown presented him with a good opportunity, he notes, although summer remains an issue there, especially with college students gone till fall.

So far he has been able to avoid cutting staff. “I’ve cut hours but not staff,” he says.

Vacationers who like some humidity in the winter continue to flock to Florida, boosting restaurant business from January through March. Speaking of his 5-year-old Boca Raton restaurant, Casa D’Angelo, Angelo Elia says, “We make most of our money in the winter. Summer is very tough.”

Seasonal fluctuations are much lower at his other four restaurants in Fort Lauderdale, Delray Beach, and the Bahamas. Profits from those restaurants help to support his Boca Raton outpost in the summer, he notes. Another boost there results from donating gift certificates to charitable events, which brings in more locals during slower times.

Miami has been experiencing lower seasonal swings than previously as the city has grown, according to Steven Haas, owner of City Hall Restaurant, opened last year, and former chairman of the Greater Miami Convention & Visitors Bureau. Still, most Miami and Miami Beach restaurants do about 50 percent more business January through March than they do in midsummer, he estimates.

A big help to Miami restaurant business has been the recent trend of well-heeled South Americans, especially Brazilians, buying foreclosed properties, which are filling with renters and condo owners. Many such formerly vacant buildings now have 100 percent occupancy, Haas says.

In sharp contrast to Florida’s frequent sunshine, the Pacific Northwest generally gets more rainfall than any other part of the country. Raw, rainy days typically put the damper on restaurant business, particularly on those that are on water.  

“If it gets sunny by 11 a.m., we’re packed by 11:30,” says Duke Moscrip, a restaurateur for 40 years who runs six Duke’s seafood restaurants in the Seattle area, of which four are on water. “From December to January I’d rather be other places, but this is home.”

In those rainiest months, Moscrip runs his popular Rain Check program, which is a tongue-in-cheek reversal of most such programs. His staff gives customers business card-sized “rain checks” on sunny days to use when it’s raining for various discounts. “It gets people back in when it rains,” Moscrip notes.

To staff up efficiently on sunny days, when lines of customers often run out the door, Moscrip has a certain number of workers on call and closely watches the weather forecast. “By 10:30 a.m. we know how much staff we’ll need. That’s how we control staffing, so labor costs don’t go crazy,” he says.

The difference in sales at Moscrip’s waterfront restaurants can vary by 75 percent, depending on the weather. Usually, doing five-to-six turns a day in the good weather makes up for the slow days.

When sales first dropped 20 percent when the recession hit in 2008, Moscrip began “tightening up our whole operation” and saving about $1 million a year in labor and food costs. Annual sales of $14 million have stayed flat each subsequent year but have not dropped further, he says. Two-thirds of the savings resulted from eliminating an assistant manager position in each of his six restaurants.

Kyle Nicholson, innkeeper and chef of The Bluff at Friday Harbor House on San Juan Island, located about 2-1/2 hours from Seattle via driving and car ferry, faces the additional challenges of his destination location in the winter. He offers off-season packages to the island’s 6,000–7,000 locals, as well as weekend visitors, such as winemaker dinners, cooking classes, and movie nights.

He also cuts back hours, closing on Tuesdays and Wednesdays and suspending lunch services. His Sunday and Monday dinner business benefits from other island restaurants being closed on those nights.

The winter menu includes preserves his staff makes from local produce during peak harvest season, saving on food costs. Some of his staff members work seasonally, swapping San Juan Island for ski resorts during the winter months.

Nicholson said he hasn’t measured any effects of the recession on business because he hasn’t been at The Bluff a full year. He does note that a lot of property on the island is for sale.

In New Orleans, Steve Pettus, a managing partner for Dickie Brennan & Co.’s three restaurants, says his and many other local restaurants have been insulated from the national economic woes because so much money has been “poured into our economy since Katrina. There is a lot of construction going on now. The core business area is doing better than ever,” he says, and 2010 and 2011 were record years for his group.

Still, Pettus and his partners carefully watch their expenses, because the costs of goods sold are higher than ever. Making a large shrimp buy at the right time, for instance, recently saved the company a great deal.

When tourism to New Orleans slows during the summer, Pettus, like his peers in other tourism-dependent places, ramps up attention to the locals. He participates in the Louisiana Restaurant Association’s “We Live to Eat” promotion, which touts its abundant summer seafood and produce resources. He estimates that New Orleans has 50 percent more restaurants per capita than other cities and that locals eat out an average of 3.2 times a week year-round.

Pettus stresses the importance of closely monitoring costs all the time, but especially during the slowest seasons, when he sometimes monitors them hourly. “If you track the leading indicators, it works,” he says.