Restaurants Feeling Recession Looking to Borrow Money

Restaurants Feeling Recession Looking to Borrow Money

Restaurants Facing Same Recession Issues

The recession has spared no American business or individual, and restaurants are no different in this matter, as they face the same problems many other businesses do. Faced with less people walking in, or making reservations, restaurants are left with two options: come up with new ideas or borrow money to meet existing costs. Some restaurants in the Bay area have taken both options and succeeded where others have failed. After borrowing money, they have been able to capitalize on an idea that seems to be working.

Drop in Morning Clientele

Any restaurant worth its salt will say that the most profitable part of its business comes from the breakfasts they serve. With a drop in customers, restaurants are faced with a daunting task to keep the profitability of the restaurants in check, and offering discounts or dropping prices is not a preferred option. At the same time, restaurateurs realized that their bills did not stop even if customers stopped coming in. Their bills continued coming in and still need to be paid, along with the wages of their employees. They could either borrow money or come up with new plans to counter the threats faced. Under the circumstances, they were left with little choice as they opted to offer brunch as an alternate to breakfast.

Breakfast and Brunch Outlets Increase

There has been an increase seen over the past two years of many brunch outlets in Bay area. Offering a meal between breakfast and lunch did mean that fewer clients would walk in for lunch, but these restaurants were offering something more to the customer who was happy to pay for it. While some restaurants have just included brunch in their ongoing system, others have invested in new facilities that cater mainly just to serving brunch only. Investing in a new infrastructure would have meant borrowing money for the investment, and looking at the number of outlets popping up everywhere, one can confidently say that the investment was well deserved.

Drop in Breakfast Business

While breakfast is considered the most important meal of the day, drops in business were seen in many areas in this segment, which led to restaurateurs coming up with the idea of a brunch. Overall, the business in restaurants has dropped by 4% compared to the same period last year, but the corresponding figure for breakfast sales is in the region of 3%. With the introduction of brunch as an option for customers, restaurants are reporting better figures in their daily turnovers, while some have reportedly doubled their business with the introduction of brunch.

A Good Investment?

It is quite obvious that many restaurateurs may have borrowed money to invest in a new concept, while others have even set up new outlets just to serve brunch. All of them are reporting similar results with the exception of a few, which can be expected. They have certainly hit upon a theory that has proved profitable, even if they must borrow money to get started. Is this the wave of the future? One may never know until the wave has disappeared.

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