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Downtown upscale eateries cancel their lunch plans

October 30, 2009

A still-snippy economy and a bevy of penny-pinchers are conspiring to squeeze out one of the noontime perks of downtown Indianapolis office dwellers–a civilized, sit-down lunch.

While fast food remains a favorite for value-minded patrons, several higher-end restaurants in the Mile Square and its nearby environs have decided in the last year to pull the tablecloth out from under their lunch service.

Recent defectors from the rolls of downtown lunch destinations include The Restaurant at The Canterbury Hotel, 123 S. Illinois St.; Agio, 635 Massachusetts Ave.; Taste of Tango, 36 E. Washington St.; and Scholar’s Inn, 725 Massachusetts Ave. The restaurants continue to offer dinner.

The Canterbury’s restaurant mothballed its lunch menu in September. Lunch sales had declined 10 percent to 15 percent from last year, according to manager Netza Salgado.

“The economy is slow,” Salgado said. “And I think people think that the restaurant is more expensive, being in the lobby of the hotel.”

The restaurant continues to offer lunch for private parties and business gatherings. Salgado said he would reassess whether to offer lunch to the public after the holidays.

Likewise, Taste of Tango has retreated to the security of private lunch affairs. The 8-month-old Argentine restaurant dropped open lunch service this summer after seeing wild swings in patronage.

“We had some days that we were packed and some days that we were empty,” said owner Fabricio Perez. Neither scenario was beneficial, either resulting in operating losses or spotty service and unsatisfied customers.

“We still get calls asking if we offer lunch, but, at this point, I don’t think so,” Perez said. “We are a family-owned restaurant, and we have to adapt to the market. We can’t provide something that the market doesn’t want.”

Empty seats in front of five-piece place settings are now a more common sight across the country. In June, July and August, lunch traffic at restaurants nationwide slipped 4 percent from the same period in 2008, according to The NPD Group Inc., a Chicago-based firm which tracks consumer and retail trends. Lunch accounts for 34 percent of all restaurant patronage.

Overall restaurant traffic dipped 3.6 percent in the quarter from the previous summer–the fourth consecutive quarter that overall traffic has declined from a year earlier, according to NPD data.

“This is the weakest we’ve seen the industry in over 30 years,” said NPD restaurant industry analyst Bonnie Riggs.

The steepest declines have been reserved for the market segment that NPD terms “fine dining”–those independent and chain establishments positioned a cut or two above Appleby’s and The Olive Garden. During the summer quarter, fine-dining locales nationwide welcomed 12 percent fewer diners than in summer 2008.

Although not an apparent trend across the country, it makes sense that upscale eateries feeling the pinch in Indianapolis would ditch their lunch service, Riggs said.

“Those types of places are so dependent on entertainment and corporate travel and expense accounts, and those are all going away,” she said. “Fine dining is a high ticket. I think those days of lavish spending, especially on expense accounts, may be over.”

Higher unemployment also hurts lunch traffic, Riggs said. And many patrons tend to "trade down” on the food chain during tough economic times, switching from fine dining to casual restaurants, and from casual restaurants to fast food, and so on.

“They aren’t only trading down in segment, but also in the menu items,” Riggs said. “One of casual dining’s strongest-growing menu items is the burger. People still go out but keep the check as low as they can.”

Offering lunch also is a big expense for restaurants. Eateries must pay cooks and wait staff, and often must offer separate menus with items apart from dinner offerings.

“If you are a dinner restaurant that decides to do lunch, you have to have a whole shift of cooks coming in at 7 a.m. instead of 2 p.m. The expense of the day doubles, but you’re not necessarily doubling your income,” said Steve Delaney, principal and restaurant specialist for Sitehawk Retail Real Estate.

Offering a separate lunch menu proved too complicated for Scholar’s Inn, which operates a sister restaurant in Bloomington that only serves dinner, according to owner Lyle Feigenbaum. The Indianapolis location gave lunch a go after remodeling in April 2008, but discontinued the service after the year-end holidays.

“Being open that many hours and doing all those menus, it didn’t really fit what we were all about,” Feigenbaum said.

A block down Massachusetts Avenue, Agio stopped offering lunch at the end of this summer. The Italian eatery struggled with the midday expense of staffing and operating the restaurant, which isn’t ideally suited for lunch crowds.

“It wasn’t paying what we needed it to,” said co-owner Jeffrey Wright. “We’re just a little too far east. The consensus I heard from people downtown was that we can’t get in our cars, get down there, find a place to park, eat lunch and get back to work. Nobody had the time. Even at lunch, we’re not a slam-’em-in, kick-’em-out kind of restaurant.”

One downtown upscale establishment is sticking with lunch for the time being, despite a stomach-turning drop in revenue.

At ritzy R bistro at 888 Massachusetts Ave., lunch sales this year have dropped about 25 percent from 2008, according to owner Regina Mehallick.

“It definitely is down, no doubt about it,” Mehallick said. “I want to stay open for lunch, because I think there is an audience for business lunches.”

She’ll reevaluate her plans after the holidays. “I kind of check on it every three or four months,” she said. “In my mental picture for the coming year, I would hope to be open for lunch.”

Riggs of the NPD Group wouldn’t be surprised to see more fine-dining restaurants pull the plug on lunch service.

“This is such a ‘me too’ industry that once they see someone latch onto something that is working, they copy it,” Riggs said.

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