How Ark Restaurants Corp. is prioritizing customer loyalty over profits #Ark #Restaurants #Corp #prioritizing #customer #loyalty #profits Welcome to GistFeed
The answer: “We don’t,” he said.
Weinstein’s approach means that Ark’s margins are getting squeezed at a time when restaurants around the city and the country are trying to balance the high costs of labor and food with the threat that sustained inflation will lower consumers’ ability to spend on discretionary categories such as dining out.
Despite rising costs across the board, Weinstein has decided to prioritize customer loyalty over high profit margins.
“We have customers we want to retain, and we don’t want them to think we are using high labor costs or supply issues as an opportunity to raise prices,” Weinstein said.
The city’s hospitality industry still lags its pre-pandemic employment figures, even as many individual restaurateurs report solid demand. Bookings on the reservation platform OpenTable reflect that demand. City eateries that have used OpenTable since 2019 saw reservations rise to at least 90% of their pre-pandemic levels every day during the week ending Aug. 21.
Yet staffing for that volume has become a challenge.
Hosts who used to earn $17 an hour at the Bryant Park Grill are now coming in at $20, for example, Weinstein said, and nontipped positions are seeing a minimum of 15% increases in pay.
New York’s returning events business was one of the main contributions to the company’s revenue growth for the quarter, according to its filing.
Yet hosting the parties has become more expensive for Ark, Weinstein said.
At parties, if someone works with no tipping, that person makes about $35 an hour, he said. But if there are more parties than servers available, overtime kicks in, and that rate ratchets up to $52 an hour, he explained.
At El Rio Grande, Ark’s Tex-Mex spot in Murray Hill, prices have not gone up in four years. Bryant Park Grill’s prices have gone up only modestly, he added.
Despite this math, Weinstein, who runs restaurants in Nevada, Florida, Alabama, Washington, D.C., and New Jersey in addition to four in the city, the confluence of forces has led him to prioritize keeping menu price increases modest where possible.
“Certain products we’re getting killed on,” he said.
Lobster is one. Although Weinstein raised the price slightly, it was not enough to preserve margins on lobster orders.
His ultimate hope is for a repeat of 1979, a time when he was navigating similarly high inflation in the coffee business. Coffee futures skyrocketed in the late 1970s, he remembered. As a result, he had to increase the cost of a cup of joe from 60 cents to $1. Sales volume, remarkably, stayed steady.
“Then coffee prices went back down,” he said. “And we were still getting $1 for a cup.”