We’re deep into a downturn. No doubt about it, as all the signs of doom and gloom pierce through the headlines on the pink pages every morning. I remember sitting in a chalet in Italy in January, watch markets plummet on CNN faster than I could ski down slopes at that time. But the activity in the markets at that time seem to be a tiny blip compared to the “turbulence” over the last few weeks.
The collapse of big historic names such as Bear Sterns, Lehman Brothers and Merrill Lynch has been staggering, but it only goes to show that you can outrisk yourself when someone calls your hand. Every poker player knows that could can risk playing a bad hand – in fact, it’s the way to earn the big bucks – but, you know if someone calls you, then it could be disastrous, as the aforementioned bankers know too well.
But what is effectively a banking crisis has created a problem everywhere else. My guess is that consumer spending was probably all right and many of the populus were happy to carry on the way they were spending earlier in the year. But as credit crises go, the fact that banks wouldn’t lend to the individual (mortgage approvals drying up, etc.), that’s led to a fear amongst consumers that things are going to turn out bad.
And the bankers in those firms that are still standing know that too. Canary Wharf in London is one of the big financial centres of the world, housing big names such Citigroup, Barclays, HSBC, Bank of America, Credit Suisse and Morgan Stanley, as well as some of the big law firms such as Clifford Chance. The area was a retail gold-mine, with the opportunity for business to make a mint from the nice corporate lunches and client dinners, who often used to schmooze with the big guns in one of the posh local restaurants.
But as the purse strings in the banks have been tied up, so has the corporate hospitality. Canary Wharf is seeing big name restaurants close. One of the biggest, Ubon by Nobu, a branch of Nobu’s international empire, has closed down, whilst Smollensky’s, a fashionable bar chain, is looking for someone to take over its prime location in the Wharf. In nearby West India Quay, a popular hangout for post-work drinks, two bars, dion and Beluga Café, have packed their bags. And in one of the new developments in Canada Tower (that’s the big famous one in the Wharf), Tom’s Kitchen has not only pulled out of moving in, it’s actually gone bust.
Like a scene from the TV series Gordon Ramsay’s Kitchen Nightmares or The Restaurant, eateries are needing to think very carefully about their businesses and who they target to. Most of all, they need to have the right proposition to survive.
It was noticeable recently, when my girlfriend, Li, and I went out on a Sunday night out to Bayswater, in London. A popular area of town, it’s full of oriental restaurants, Chinese, Thai, Malaysian, Japanese, as well as a few of your fast food fayres (McD’s, Pizza Hut, Subway). Clientelle varies in the area. Nearby are some fairly affluent areas, as well as student residences.
But, it was clear that business was still pretty brisk in the area. 7pm on a Sunday night, most restaurants were full and some had long queues outside, particularly the canteen style oriental ones. A couple were nowhere near full.
One of those was a Shanghainese style restaurant. I won’t mention its name, but if it survives past Christmas, I’ll be surprised. I’ve been to their Tottenham Court Road branch before, and it wasn’t bad, so I went there this time. Sadly, half of their menu had been covered by white stickers with “N/A” on them. We were told a few other dishes had run out, and after ordering six dishes from their skinny remains, we were told another two weren’t available. Sensing that we weren’t going to be full from dinner, we asked to cancel one dish, so that we might go somewhere else after sampling the Shanghai specials. The cancelled dish arrived nonetheless and when we tried to send it back, the waitress did a “hmph” and walked off into the kitchen. Unfortunately, we had no choice at that point other than to leave.
We left for another restaurant instead, called Saki, a Japanese eaterie serving sushi and a range of traditional Japanese dishes. This was a complete contrast. Some very good food (excellent sushi, tempura and terayaki), but on the slightly pricey side. But well worth it in our opinion and it’s challenging my favourite Japanese restaurant, Ten Ten Tei. But you couldn’t help but notice the place was less than half-full. If it were in another part of town, I’d be certain that this would be a buzzing kitchen. But on a Sunday night where everywhere else was full, it just wasn’t attracting people through the door.
Everyone who knows how to run a good business knows that in times of a downturn, people don’t necessarily stop spending, they generally make choices as to how they spend more efficiently. For business owners, this means more than ever that you have to look after your customers and make sure you give them what they want. In both these eateries, they haven’t got it right. “Fake Shanghai restaurant” suffers from both problems, “Saki” is just a bit expensive. It’s not too hard to tweak the business models to work in their environment. Let’s hope that they do it soon and not end up as one of many of London’s restaurant casualties.