It's the 'Super Bowl' for restaurants

But are restaurant operators ready to take advantage of Mother's Day and tax rebate checks that arrive in the coming weeks?

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Parija B. Kavilanz, CNNMoney.com senior writer

restaurants.ce.03.jpg
Tax rebate checks, together with Mother's Day, graduation and prom, could help lift sluggish restaurant sales over the summer.
What would it take for you to drive less?
  • $4-a-gallon gas
  • $5-a-gallon gas
  • Iíve already cut back
  • Iíll drive at any cost

NEW YORK (CNNMoney.com) -- This year, restaurant operators have two reasons for licking their chops in the next several weeks: Mother's Day and the tax rebate checks.

Those two events represent significant opportunities to boost sales and traffic at time when a cooling economy is causing families to hold back on having dinner out.

"May is the Super Bowl month for restaurants," said Rich Jeffers, spokesman for Darden Restaurants (DRI, Fortune 500), the No. 1 casual dining operator whose chains include Red Lobster and Olive Garden.

Mother's Day, which falls on May 11, is considered to be the biggest eating-out day of the year, according to the National Restaurant Association (NRA).

The National Retail Federation estimated that consumers spent more than $3 billion on a special Mother's Day brunch or dinner in 2007. The trade group hasn't yet released its 2008 forecast.

NRA spokesman Michael Donohue said Mother's Day, combined with other big eating-out events such as graduation and prom, typically act as mid-year booster shots for restaurant sales.

In addition, the tax rebate checks which arrive in mailboxes next month could be the icing on the cake for struggling restaurant operators badly in need of a sales lift.

Morningstar analyst John Owens, who covers the restaurant sector, said he's already seeing plenty of pricing promotions such as coupons, limited-time menu discounts and special advertising geared toward influencing consumers to break habits and try out a different restaurant brand.

"You give people a great deal and they'll switch loyalties," said Owens. The switch may be temporary, but he said companies still have to make every effort to woo customers in a difficult business environment.

That's because the NRA's Restaurant Performance Index - which tracks members sales, traffic, capital expenditure and other metrics on a monthly basis - has shown four straight months of contraction through its most recent report.

Menus get tweaked

Mother's Day is the busiest day of the year for Outback Steakhouse, said Paul Avery, chief operating officer of the chain that's owned by No. 3 casual dining operator OSI Restaurant Partners.

To that end, he said the Outback Steakhouse would offer several "value-priced" options for its customers on that day.

Beyond that one-day event, Avery said OSI was also acutely aware that its consumers are eating differently in restaurants.

"They are ordering more appetizers, salads, side dishes and cutting back on alcoholic beverages," he said. Therefore, he said the company was adjusting its menu offerings somewhat to "accommodate consumers' needs today."

Those tweaks would include more appetizer options and value-priced items on the menu over the coming weeks. He was optimistic that these measures would help to draw in customers when they have the extra spending money sent to them in May.

Darden's Jeffers said his company was "very focused" on pumping up Mother's Day business at a time when the company "was seeing a little bit of softening in overall sales this year."

But Jeffers said Darden wasn't planning to do any special advertising or product promotions geared toward capturing the rebate windfall - even though he said the company "had seen an uptick in discretionary spending in the past resulting from these rebates."

Independently owned restaurants are also cooking up creative ideas to counter a recession-led sales slump.

Betsy Alger, chairwoman of the New Jersey Restaurant Association, said many smaller restaurants, faced with escalating food, fuel and energy costs, can't simply cut prices to boost sales.

"Cutting prices would just cut into [the] bottom line," she said. So at her New Jersey-based fine-dining restaurant The Frog and the Peach, she's giving price-conscious customers an alternative to expensive menu items by introducing a "Bistro style" menu.

"These options are simpler and lower cost," said Alger. "We're also seeing more people leaning towards smaller orders, two appetizers instead of an entree."

"We are fine with serving people that option now when in the past we would've looked down on it," she said. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
How Wall Streeters blow off steam The financial world is a notorious pressure cooker. See how bankers and traders chill out. More
8 of the world's craziest fast food items American food chains operating abroad must cater to local tastes to succeed. The results are spectacular. More
Inside the $50,000 Emmys swag bags If getting nominated or presenting an Emmy award isn't prize enough, celebrities come away from TV's big night with luxury goods and vacations worth $50,000. Take a peek at some of this year's luxe giveaways. More


Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.