Suburban restaurants roll out recession deals

Tony Strak and his adult son, Tony Strak Jr., have been loyal patrons at Nick's Pizza in Elgin for three or four years.

But the Elgin men have made it a new tradition of sorts to dine there Monday nights ever since ownership declared pizza will be half price until the unemployment lines "go away."

"We came here before they had the Monday deal, but now we make it a point of trying to do it on Mondays for that reason," the elder Strak said.

Added the younger Strak: "They were hurting for a while. It's helped them out from what I've heard."

The promotion at Nick's is emblematic of suburban restaurants - both locally owned and national chains - rolling out better deals in an effort to keep people eating out during the recession.

"The most important goal of a business is to maximize profit," said Khan A. Mohabbat, an economics professor at Northern Illinois University in DeKalb. "Profit is very hard to come by during a period of depression, especially the type of depression we're in right now.

"Households are cautious about not spending money," he added. "The easiest thing they can stop spending (on) is not going and eating out."

Restaurant owners are trying to provide more value for consumers, be it lunch or dinner.

It's evident at the drive-through windows and flashing marquees: dollar menus, "appetite stimulus" meals and even 12-inch subs for an Abe Lincoln.

"A $5 meal, people don't look at it in a way that it's too expensive. But if it's $8 to $10, they save their money for later," Mohabbat said.

He and Bob Riggle, an NIU marketing professor, agree that $5 seems to be the price point restaurants and fast food places are trying to hit to entice new customers and keep old ones.

"They're relying on volume to make up for lost profits (on each meal)," Riggle said. "That's what folks are going after. That $4 to $5 range is really critical. It really depends on the target market, but it sounds like companies have decided that's their line for their customer groups."

In theory, lowering prices will help build loyalty and profits going forward.

"If we can induce trial, we have a better opportunity to keep them as a customer in the future. Where we really look to make the profit is the long-term relationship we create with them." Riggle said.

But Darren Tristano, executive vice president for Technomic Inc., a Chicago-based research and consulting firm that specializes in the food service industry, painted a bleaker picture.

"What's happening today is not restaurants trying to grow. It's restaurants trying to survive," he said. "It's about keeping your doors open and keeping a break-even strategy. They are eroding their margin. They're doing everything they can to stay open."

Tristano said independently owned places have more flexibility in their payroll. For example, the proprietors can work more hours and their employees less.

"Every restaurant from fine dining to quick service is offering value in terms of price points," he said. "Consumers are changing their habits and what's driving behavior is 'Where can I get the most bang for my buck?'"

Even restaurants in Naperville, with a thriving downtown that is a suburban destination, are feeling the part of the pinch.

Katie Wood, executive director for the Downtown Naperville Alliance, said she's noticed more package pricing and deals even at some of the higher-end restaurants.

"They've all felt a bite of the economy and they've been smart to respond to that," she said. "They're not giving food away by any means, but they're driving traffic on off nights."

Wood said new restaurants are still opening in Naperville's downtown, and others are retooling to draw on their strengths.

"These are unprecedented times for everybody. I personally think we've fared better than most other communities," she said. "This town is still packed and restaurants still packed on weekend nights as you expect them to be."

Lauren Deaton, one of the managers at the Nick's Pizza in Elgin, said the Monday half-price promotion began a few months ago.

"It's been huge. We've been going on waits (for tables) on Monday nights, which is totally unheard of in the restaurant industry," Deaton said, noting at least 300 to 325 people can be in the dining room at a given time.

"We we're thinking how could we give back to the people who need it most," she said, explaining the genesis of half-price Monday's. "Right now, we're doing it until we feel people are doing better."

Tristano said the deals will last as long as the recession does. He cautioned that if the recession lingers, there could be a hangover for people hesitant to go back at a higher price point.

He also noted the market is saturated with seats for causal places like TGI's, Appleby's, and Chili's but "fast-causal" places like Panera and Chipolte are thriving.

"There still is tremendous value with the price point being so low," he said, adding that buffets and Italian restaurants that provide large, family-style portions are doing well. "There are still pockets of success in this economy."

So with all the meal deals in effect, are consumers - or at least their taste buds - coming out as short-term winners in the downturn? Mohabbat, the NIU economist, didn't seem to think so.

"If your income has gone down and the meal price goes down, I'm not sure you feel like a winner," he said. "It is really rough on everyone, except for those whose income has not really fallen."