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The business lunch may be going out of business

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The business lunch may be going out of business

Few people know the Power Lunch better than Ashok Bajaj. The restaurateur started his career in the final days of Ronald Reagan’s presidency, when he opened the Mumbai club just a short walk from the White House.

Eight of the 10 restaurants he operates today are in the same city center as his first. They are conveniently clustered around each other, making it easier for Bajaj to host multiple restaurants and be close to clients who work on Capitol Hill, the State Department and the Eisenhower Executive Office Building — what Bajaj calls his “lunch crowd.”

A key member of the group was drawn to the Oval Room by his 26-year-old Powerhouse Lunch Magnet, which closed in November 2020. The long-time regular has resumed eating lunch at places he’s open, such as Rasika and Mumbai Club. But “this is completely different from pre-COVID,” he said. “The energy in the city centre has been sucked out.”

Of all the headaches the pandemic has brought to the restaurant industry, the most important is the lunchtime business disruption. It haunts a specific, influential group of restaurateurs who, like Bajaj, own prominent restaurants in big urban centers from which office workers are fleeing, as well as their corporate expense accounts.

Continued uncertainty about when or whether these workers will return has left the restaurants serving them without a significant source of revenue, at a time when the cost of doing business, especially in dense urban areas, is soaring. Meanwhile, many of the diners who used to be accustomed to forming relationships and closing deals at midday are now making those connections in front of their computer screens at home while eating salads from takeout boxes.

These economic and behavioral shifts are fueling concerns about the viability of independent restaurants in big cities, where they have become bulwarks against the homogenization effect of corporate chains. “The Cheesecake Factory will open March 30 in downtown Washington and people are freaking out,” read a headline on Washington’s website last year, atop an article reporting on the replacement of an award-winning chef-owned restaurant .

In an apparent nod to the new reality, Bajaj opened Bindaas Bowls and Rolls, a takeaway downtown, in April. Not long ago, a quick service pit stop by a restaurateur known for his virtuosity and designer suits was unimaginable.

“It seemed like the right time,” he said. “Not many people are making power lunches these days.”

Restaurant lunches are booming at less upscale restaurants across the country, especially in suburban and residential areas where many Americans are working during the pandemic. According to the National Restaurant Association, total sales at fast food restaurants have surpassed those at table service restaurants since the start of the pandemic, upending the historical norm. Fast-casual chains continue to open in cities such as Washington and San Francisco.

But even as demand for dinner reservations picks up, some independent city restaurants that used to be thriving midday are still closed at lunchtime. Rising costs and labor shortages have made low-priced lunch menus almost certainly loss-making, many operators said.

Nancy Oakes, who opened Boulevard in San Francisco’s Embarcadero area in 1993, said commuters returning on staggered schedules — say, three days in the building and two at home — were too unpredictable. , cannot justify hiring and training employees. lunch.

“With this hybrid workday, is Wednesday the new Monday, or is Thursday the new Friday?” Oakes asked. “If I can crack that code, I might have a chance.”

Hudson Riehle, senior vice president and director of research at the National Restaurant Association, said most of the high-end restaurants struggling with changes in the lunch economy are in cities that saw record job growth in the decade after the Great Recession in 2008. . “The economic expansion,” he said, “has spurred the development of more restaurants, especially independent operations catering to urban worker groups.”

However, recent numbers do not portend a quick return to pre-COVID conditions. According to the Restaurant Association, about 47% of diners working from home are eating out for lunch less often than they did before the pandemic.

In the first four months of the year, lunch reservations at restaurants with an average check of more than $50 were significantly lower than in the same period in 2019, according to data from online reservation service OpenTable. They dropped in Washington (38%), New York City (38%), San Diego (42%), Philadelphia (54%) and Chicago (58%).

Joel Johnson noticed the change. Johnson, 61, the head of government affairs in the Washington office of FGS Global, a strategic communications firm, ate an average of three business lunches a week before the pandemic.

The ritual is so ingrained, he said, that “between 12 and 2, no one is going to schedule a big client meeting. It’s understood that people might go to lunch. That’s been canceled during COVID.”

The downtown lunch business hasn’t stopped entirely. “Some days are good,” Bajaj said of his lunch restaurant, noting that Ketanji Brown Jackson had lunch at Rasika, his modern Indian restaurant near the Capitol, shortly after being confirmed by the Supreme Court in April.

Chef Eric Ripert says his lunch at Le Bernardin, a famous midtown Manhattan French restaurant, is “100% capacity,” but that’s not the case at nearby Aldo Sohm Wine Bar. He co-owns. Equally famous and expensive Manhattan restaurants like Per Se, 11 Madison Park and Jean-Georges have yet to resume lunch service.

Busy lunch on a June Wednesday at Higgins, an influential restaurant in downtown Portland,

The restaurant’s chef and co-owner, Greg Higgins, said he’s struggled to attract midday diners — but has also benefited from a spate of closures nearby.

“The restaurant in the hotel is gone,” he said. “We are now one of the only options.”

The story of suburban restaurants is almost the opposite of inner-city restaurants, said Riehle of the National Restaurant Association.

The Detroit-area business run by the Samy Eid family showcases the split screen. “We reopen as soon as possible in Phoenicia for lunch,” Eid said, referring to their

,suburbs. “It’s back.”

Leila in downtown Detroit is another story. Eid opened this modern Lebanese restaurant to critical acclaim in 2019, largely to capitalize on demand for lunch about three blocks from Quicken Loans headquarters.

“I don’t know if lunch will come back to Laila,” Eid said. “It’s a multi-million dollar project. To say it makes more sense to keep it dark tells you what crazy things you need to know.”

In the short time that Laila was open for lunch before the arrival of the coronavirus, Katie Cockrell said she was in the restaurant so often that staff “jokingly said I stopped at the bar at noon and would still be at 3pm” There.”

Cockrell, 37, StockX’s vice president of communications, said she sees restaurants as daytime workspaces. “People just walk up and chat,” she said. “If I can add good food to it, why not?”

Many owners say the pandemic has exacerbated challenges that have long plagued restaurants in big cities.

Pressured by rising costs and a generational shift evidenced by the number of fast-casual restaurants in downtown San Francisco, Oakes said she nearly closed Boulevard in 2019. A partner at an investment firm with an office in the same building persuaded her to stay open and help with lease negotiations.

“We used to have a very busy lunch with 250 people. Even before COVID, we were in the 150s and 160s,” she said. “I’m ready to turn the keys.”

Today, lunch reservations at high-priced restaurants in San Francisco are actually 15% higher than in 2019, according to OpenTable. But during that time, Mitch Rosenthal has closed the three restaurants he and his brother Steven owned there. All are close to the offices of tech companies like Facebook and Salesforce.

Their remaining restaurant, Town Hall, is also on the same block. (Bjorn Kock is a co-owner of the restaurant.) Rosenthal said dinner was busy but may never reopen for lunch. The low-priced lunch menu makes it nearly impossible for San Francisco to turn a profit, he said.

“I pay the chef $25 an hour,” he said. “Do I think they deserve it? Yes. Does that mean the restaurant can make a profit? That’s another story.”

When Marea, an Italian restaurant in midtown Manhattan, fully reopened in February for daily lunches, its owner, Ahmass Fakahany, noticed that the pandemic had changed the behavior of diners.

This restaurant is known for its Michelin star and wealthy patrons. Fakahani, a former co-president of Merrill Lynch, said Marea’s slightly simplified new lunch menu suits the mood of business clients who have used video conference calls to resolve the tensions they once dealt with at his restaurant. These diners are now looking to deepen their relationship over lunch.

“I’m seeing more and more people reconnecting at a slower pace,” he said. “People used to use the term ‘power lunch.’ After all, on Zoom, it became more of a social impact lunch.

Dirk Van Dongen retired as a Washington lobbyist in early 2020 and moved to Florida. He’s still connected enough to experience what’s been lost when people are no longer face-to-face.

Van Donggen said that for more than 50 years in Washington, he ate most of his lunches and half of his dinners at sit-in restaurants. That’s how he builds business relationships with people he wants to work with and who could end up being adversaries, he said.

“But we still have to understand each other as people,” he said. “You can only do that when you can look someone in the eye.”

Washington restaurateur Bajaj remains happy to help facilitate that interaction. That’s why he opened La Bise, a high-end French restaurant, in the former Oval Room space last summer.

Bajaj hasn’t opened La Bise for lunch yet. As he waited for the right moment, he developed a new habit: visiting the local parking lot, hoping to find it full of cars—a sign that life is returning to the city center.

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