The "hug the customer" approach to fine dining in a recession. If you've ever tried to get reservations at a new Mario Batali restaurant—forget David Chang—you're well-versed with the ole "we have something before 5:30 or after 10" rigmarole. But Frank Bruni reports there's an altered mood taking over the New York restaurant scene these days: "extreme solicitousness tinged with outright desperation." With predictions that fine dining revenues could fall 12 to 15 percent in 2009, top tier restaurants are trying things they never would have six, or even three months ago, including special deals, little perks, relaxing demands, and an extra attention on what was once better left to the Applebees of the world: accessibility. Says Bruni: "They've seldom wanted you so bad, so they've rarely treated you so good." Learn how Danny Meyer got finicky chefs known for thief smoked lobster or beef carpaccio to get on board with cutting costs.
Restaurant tries pay-what-you-want promo. In more tales of epicurean entrepreneurship, a London Restaurant--taking a page from Inc. magazine—okay, and the rock band Radiohead—is letting diners pay whatever they want for their meal. Reuters calls it "an unorthodox bid to beat the credit crunch." Customers will have to pay for their drink bill but can pay as little as a penny for dishes like foie gras and steamed butterfish. Will it work? Inc. tried this strategy last spring in an attempt to attract new subscribers. As a business move, it was pretty much a failure. But, as a magazine article, it was brilliant.
Is private equity the next bubble to burst? A transatlantic coalition of unions (Britain's Unite and Services Employees International in the U.S.) warns the Guardian that the PE industry poses a "looming disaster." $500 billion in PE debt needs to be renegotiated by 2010. Alchemy Partners' Jon Moulton predicts that up to 30 percent of mid-market buyouts could end in default. Nearly 10 million people in the US and the UK now work in firms under PE ownership, after the surge of deals between 2005 and 2008. The coalition is calling for more transparency and full disclosure from PE firms of "loan repayments, debt-to-equity ratios, the identity of lending banks and the structure of covenants."
Health care reforms healthy for small business? The health care reform battle begins now. A new study by the National Federation for Independent Business (NFIB) says that an employer healthcare mandate would devastate small business. "In the current environment, an employer mandate could wipe out 1.6 million jobs in just five years and reduce the GDP by around $200 billion," said NFIB Senior Research Fellow William "Denny" Dennis. As the Portland Business Journal reported in December 2008, the NFIB led the fight against Clinton health care reforms in 1993 and 1994. Here's a sample of a similar study the NFIB released in 1994. So far, the Obama plan has tread gently on the subject of small business employer coverage though, claiming that "very small businesses and start-ups will be exempt from employer contribution, and larger companies will get tax rebates and reduced costs by joining the National Health Insurance Exchange."
Grocers find feast and famine in slump. While grocery stores get a countercyclical boost from cash-strapped consumers eating at home more, not all grocers benefit equally. For example, there's Bing's Market in Rio Linda, California, where sales are down 25 percent. As the Sacramento Bee reports, some independent grocers with specialized products have seen a bit of a dropoff. Meanwhile, across the heartland in Danville, Virginia, WSET reports that bargain grocers are seeing a big boost in sales.
Try and try again . . . and you still might not succeed. Over at Slate's Bizbox , there's discussion of new research from the Harvard Business School. A recently published working paper: "Performance Persistence in Entrepreneurship" found that entrepreneurs who have been successful in the past will have more success in future projects than those who have previously failed or those just starting out. Not exactly earth-shattering, but the findings do highlight the tough odds of succeeding right off the bat. The study found that successful entrepreneurs found success again 34% of the time, while first-timers are successful only 22% of the time.
Thanks for the bailout money, lemme just put that in the vault. Despite the hefty bailout, most of the biggest banks that received federal funds in past months do not appear to be lending more, according to the analysis in last week's WSJ. They found that lending in the 4th quarter (post-bailout) actually decreased at 10 out of 13 banks.
Forget Silicon Valley. That's the advice of entrepreneur and tech guru Tim O'Reilly who writes about the unexpected roots of innovation in a Forbes.com column. "It turns out that many of the great waves of creative destruction that have reinvented Silicon Valley didn't start there," O'Reilly argues. "More important, they didn't even start with the profit motive." O'Reilly points our that many big innovations of the last few decades--the Web, open source software, and the personal computer--were led by tinkerers, not finance types.
Meet the new jobless. In their series "The New Jobless," Fortune discusses why this is the "equal opportunity recession" — in other words, one that is not confined to certain industries or job levels. The project follows various unemployed Americans in their struggles to land another job.
Small business loans in terrible shape. From the Wall Street Journal comes bad news, especially if you're looking for a loan: losses on small business loans are rising fast. This signals a number of problems on the horizon: more unemployment (given the number of jobs small businesses create), decreased local tax revenue, and more home equity and personal credit card defaults (which owners often use as a back-up line of credit). Last fall, Bank of America CEO Ken Lewis called small business loans "a damn disaster." If you need capital, take a look at our guide to angel investing.
Oil falls, gas rises, oil rises, gas _____? Bloomberg reports that crude oil is up in New York following a positive report on the U.S. economy in the fourth quarter of 2008. Earlier in the week, oil was down and gas was up, partly due to the threat of a refiners strike, according to the Denver Post. Now, the strike has been averted, but oil is up, and a major refiner plans to delay a new refinery. The New Haven Register says gas prices could continue to rise—as most Americans fear they will.
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