When tightening one’s budget during these tough economic times, restaurant meals are one of the first things to go. Why shell out $20 or $30 for an entrée, many rationalize, when I could cook for myself for so much less? As a result, the culinary industry across the board (and across the country) has been among the hardest-hit. But for a number of dining establishments, the biggest concern isn’t the empty tables—it’s the empty party rooms.
Many restaurants—particularly bigger, urban venues—make a significant fraction of their income through hosting lavish private parties. As such, in a normal year, December is often their most lucrative month, as businesses, organizations, and private groups throw sizeable holiday events. In recession-plagued 2008, however, celebration hit an all-time low. According to executive search firm Battalia Winston Amrop
, the number of businesses holding parties is the lowest in the 20 years of their survey—there were fewer parties this December than during the recession of 1991 or during 2001, only months after 9/11. As many companies scramble to stay afloat, they simply cannot spare the expense of a large-scale party; others may wish for a celebration, but cannot justify one following publicly noted layoffs; and even those business that can still foot the bill, don’t want to be seen celebrating as so many others go without.
All this, of course, spells bad news for the restaurants hosting these parties—who, according to the New York Times
, may turn twice or three times the profit percentage from such events as they do from the average table. The Times
notes that on just two days in November, New York restaurant Del Posto saw over $1 million lost in private party cancellations. City Hall in Tribeca saw a 30% decrease in holiday party revenue—which, contributing one-third of its yearly profit, took an enormous toll. And across the country, private rooms went unoccupied as employers cut back.
A downturn in diners may spell trouble; a downturn in parties, however, may spell still more.