KEY POINTS:
The credit crunch has its upsides - such as cheaper restaurant deals for those who can still afford to fork out for a night out.
Happy hours and incentives such as free wine with a meal are proliferating in restaurants as owners struggle to attract custom in lean
economic times and over winter.
Eateries already coping with skyrocketing food prices are having to offer special deals to attract custom, and in restaurant-saturated Auckland, some are employing touters to get people in the doors.
Restaurateurs canvassed by the Herald on Sunday said offering regular customers a free bottle of wine with their meal, or creating a promotional menu with cheaper meal options is imperative as they face a long winter.
Front-of-house staff - particularly at tourist strips such as Mission and Oriental Bay - were increasingly resorting to touting menus outside. Even five-star hotels such as Auckland's Stamford Hotel have begun handing out "drink cards" in the street, offering discounts for its lobby bar. Drink cards are entrenched in competitive Australian markets such as Surfer's Paradise and Melbourne.
Harry Machiela, of Restaurant Indonesia in Hawke's Bay, and the former regional head of the Restaurant Association, said the hospitality industry there had seen a "huge" downturn in the past four months.
He said diners could expect to see more specials, such as Indonesia's upcoming free glass of wine deal, but as net profit margins of 10 per cent were the norm for the industry, there wasn't much room to move.
"There is huge pressure on us to raise prices. I can't imagine we will see too many price decreases, it's so hard out there anyway."
Auckland seafood institution Harbourside packed in punters last week after offering its 1988 menu at 1988 prices.
Director Jimmy Gerard said the promotion, which priced main courses such as pan-fried snapper, sirloin steak or a tempura seafood platter at only $15-$16, needed numbers to make a profit.
He said special pricing could not be maintained, and he didn't expect to see any restaurant dropping their prices permanently in an effort to get more diners. "It's not realistic."
Substantial price hikes for food products had begun about three years ago, he said, but over the past six months, they had really "taken off".
A sack of short grain rice cost Harbourside $28 four months ago, whereas now it cost $52.
Bart Littlejohn, of Sails Restaurant, also the Auckland branch president of the Restaurant Association of New Zealand, said winter had always been a struggle for restaurateurs, but this year was tougher than ever.
As well as a huge jump in food costs, there were rising rents, gas and electricity prices to deal with, as well as increased wage costs. Profit margins, which are traditionally small, were now almost non-existent.
He said the prospect of Kiwis eating out less due to their own budget restrictions would be a recipe for disaster for some establishments.
Littlejohn said even established eateries were having to work harder to make budget.
Sails was currently contacting its regular clientele, offering them a complimentary bottle of fine wine when they dined this month.
Littlejohn said discounting would not be sustained. "Some [restaurants] will hold passing on price increases during the winter months in order to increase trade, but it will be eating away at margins. Increases will be seen during the summer."
David Williamson, of AUT's school of hospitality and tourism, said the "permanent price cutting" now being seen in the retail sector would soon spread to parts of the hospitality industry. However some restaurants would not survive the credit crunch.
"You will probably see more happy hours and specials for a while but you are also going to see operators leaving the marketplace."
