New York’s Le Cirque is closing. It can’t make ends meet.
Before I continue let me establish my bona fides. I am probably the best cook you know. I am an excellent cook, I cook fundamentally in the classical French style but I can also produce credible dishes in most of the world’s cuisines, particularly cuisines paysannes (which I tend to prefer). I like to eat; I like and understand food. And, as fate would have it, I know a little about the restaurant business as well.
Just about every restaurant, whether Alinea or a McDonald’s store, has the same critical success factors: location, rent, payroll, the cost of food. Of those three location and rent are by far the most important. The cost of food is almost an after-thought, particularly for a better restaurant in which it wouldn’t be surprising for it to spend ten times as much for rent as for food, as is the case for Le Cirque. That’s the reason that so many restaurants serve such large portions. It’s a relatively cheap way to offer value.
The linked article omits two significant factors without which I can’t really tell you what Le Cirque’s problem was: revenue per customer and number of customers per operating day. To my eye and based on its online menu, its prices appear to be too low for a restaurant in its location and of its class but let’s assume that its prices are what would be expected and it can’t raise prices without losing business.
The only conclusion I could draw is that Le Cirque can’t afford to operate in New York City. San Francisco, take note.
Well, Dave, I’m no chef or businessman, I’m a milkman, but I’ve seen plenty of restaurant customers close over the years. In many cases, a very successful place just keeps doing what worked so well for them, as their customer base ages and new upstarts pop up around them. They know they at least HAD a good model, and they keep waiting for business to pick up. But times change, and today, it’s as much about the dining experience as it is the food or service.
I’m amazed at retail businesses tearing down 20 year old buildings to build anew and remain competitive in all kinds of retail, but I don’t doubt their wisdom. It’s a new , changing ever faster world out there.
I realize I’ll be treading on somebody’s toes when I say this but if a restaurant needed to provide good food or service to prosper McDonalds wouldn’t exist. What a restaurant needs to do is provide what its customers expect.
Or, possibly, in this N.Y. case, where they want to be seen.