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Hardly a week goes by without signs that the restaurant industry is recovering. Another one today prompted me to start this thread.

 

Sam Sifton reported today that Cabrito will close at the end of the month. The chef, Zak Pelaccio, says he is replacing it with a new concept:

 

It’ll be a place where the plates are a little more studied and the food is not so deliberately leaning toward the Southeast Asian end of the spectrum,” he said. “I think there will be full, robust flavors. It won’t be precious. It’s a way for me to enjoy cooking a little more.”

 

Kate Telfeyan, the director of public relations for the Fatty Crew, said: “It’s going to be a slightly more serious Fatty restaurant. “Something with a slightly more grown-up menu and service style.” Ms. Telfeyan paused and laughed. “Or grown-up-ish,” she added. . . .

 

Mr. Pelaccio said that Cabrito’s interior will be pulled out, and the kitchen remodeled. The seating will be comfortable and cozy, he said, and the room “will be quieter.”

 

Of the menu, Mr. Pelaccio said, “I’m still fleshing some things out, and I don’t want to end up with a foot in my mouth, but there is going to be a more mature aspect to the menu, for sure, and greater depth on the wine list. I think there will be full, robust flavors. It won’t be precious.”

Now try to ignore, for the moment, the question whether this new restaurant will be any good, which is impossible to say when the concept is as vague as that.

 

Nevertheless, how often in the last two years have you heard any chef say that they were aiming for a "more grown-up menu and service style," "more mature," seating "comfortable and cozy," a "quieter room," and "greater depth on the wine list"? It is exactly the opposite of what almost everyone has been doing the last couple of years.

 

Now, I don't expect Pelaccio to open Jean Georges, which Pelaccio has neither the ambition nor the skill for. But this is not the direction anyone (that I can recall) has gone since the fall of Lehman Brothers, aside from the high-end Italian places like Lincoln, Ai Fiori, Manzo, and so forth, all of which had big-money backers behind them.

 

I have no idea how well Cabrito was doing, but I can't recall many chefs lately that have closed a restaurant so that they could open something "more mature" and "quieter" (code words, surely, for more expensive) in the same space.

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I have no idea how well Cabrito was doing,

Cabrito was just about the only place with better than serviceable food in that neighborhood where you could consistently sit down to eat without a wait during peak weekend hours. This is also going to be the third concept in this space by the ownership group just FYI.

 

Clearly this was a restaurant failing on its own terms, not a closing predicated on the space being repurposed into something higher and better as you seem to want to imply. As for why he wants to do something higher end? who knows maybe he's realized the walking traffic there isn't enough for the model BarFry and Cabrito had so they are looking to do something higher ticket lower turn.

 

ETA: Maybe he's getting a little more confident in his personal brand and his investors are indulging him?

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So the fed collects data on a wages in a bunch of industries by state - including NY. There are two data sets that have a use here - Food Service - recovering nicely:

http://research.stlouisfed.org/fred2/graph/?s[1][id]=NYEACC

 

and a group that I think is more indicative of high end restaurants (most of the foodservice data represents lower price point/more inelastic demand businesses - and the sample size of high end restaurnats is so small you can't really calculate the data by price point)

 

Arts, Entertainment and Recreation

http://research.stlouisfed.org/fred2/series/NYEART?cid=27314]

 

As an addendum to this I would include this lovely little graph

Finance Wages.

http://research.stlouisfed.org/fred2/series/NYEFIN?cid=27314]

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Clearly this was a restaurant failing on its own terms, not a closing predicated on the space being repurposed into something higher and better as you seem to want to imply. As for why he wants to do something higher end? who knows maybe he's realized the walking traffic there isn't enough for the model BarFry and Cabrito had so they are looking to do something higher ticket lower turn.

What is notable to me is not what happened to Cabrito, but what he is choosing to replace it with. Were people doing that a year or two ago? Nope. Back then, either the restaurant would close outright, or it would be replaced with something more casual still. I'm not sure exactly how much more casual you can get than Cabrito, but I'll bet one could come up with something.

 

I realize that one can always come up with reasons (other than optimism about the economy) why people do such things. I'll keep posting examples, and I realize you'll continue to insist that they couldn't possibly mean anything good.

 

Why is the NYT restaurant critic, who will, presumably, review the new concept, report on news such as this? is the dining section so understaffed? (although bruni did that too in better days)

As you've noted, Bruni did this too. They must've decided long ago that it does not constitute a conflict of interest for the critic to report such things.

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Clearly this was a restaurant failing on its own terms, not a closing predicated on the space being repurposed into something higher and better as you seem to want to imply. As for why he wants to do something higher end? who knows maybe he's realized the walking traffic there isn't enough for the model BarFry and Cabrito had so they are looking to do something higher ticket lower turn.

What is notable to me is not what happened to Cabrito, but what he is choosing to replace it with. Were people doing that a year or two ago? Nope. Back then, either the restaurant would close outright, or it would be replaced with something more casual still. I'm not sure exactly how much more casual you can get than Cabrito, but I'll bet one could come up with something.

 

I realize that one can always come up with reasons (other than optimism about the economy) why people do such things. I'll keep posting examples, and I realize you'll continue to insist that they couldn't possibly mean anything good.

 

And I'll keep posting data that you'll keep ignoring. Also let's wait and see what he opens up here before you start claiming something ok.

 

And to restate things once again - I am not unoptimistic about about the economy, certainly not for the nation as a whole - I am admittedly less sanguine about the NY area just given the large % of GDP that comes from the Financial Service industry but certainly for many people things will get better - and I would appreciate it if you would remember that before you claim I said things I never said.

 

My assertion is, and has always been, that the entire high end of NYC - whether it be restaurants, luxury goods, or Real Estate is unsustainable and has more declines in demand ahead of it. I don't think places like, well Cabrito or Fatty Crab are in this category.

 

Despite this, and despite all of your love of posting articles from people incented to convince people that it is ok to spend, I provide you with real data that shows that spending on things that are purely discretionary has not increased. The empirical evidence for Real Estate is that the market is not getting better despite borrowing costs being at all time low levels. Additionally the main engine for consumption at these levels, the financial services industry, is on average going to have lower wages in '10 then it had in '09.

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I'll keep posting examples, and I realize you'll continue to insist that they couldn't possibly mean anything good.

 

I want you to go back and read what I said.

The Restaurant probably failed, it was often empty

The is the second failure they have had in that space

Therefore maybe they have decided the foot traffic is not enough to support the sort of high turn, lower ticket concepts they had previously

Thus, the effort to upscale things is an attempt to make the space work. That's all I said.

 

I'm not precluding the idea that the team there is more confident about the economy. At the same time I can tell you that across the board there is no information in firm investment decisions wrt future economic growth.

 

I'm not saying their investment decision is by definition wrong or right, I'm just saying there is no information in it.

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Clearly this was a restaurant failing on its own terms, not a closing predicated on the space being repurposed into something higher and better as you seem to want to imply. As for why he wants to do something higher end? who knows maybe he's realized the walking traffic there isn't enough for the model BarFry and Cabrito had so they are looking to do something higher ticket lower turn.

What is notable to me is not what happened to Cabrito, but what he is choosing to replace it with. Were people doing that a year or two ago? Nope. Back then, either the restaurant would close outright, or it would be replaced with something more casual still. I'm not sure exactly how much more casual you can get than Cabrito, but I'll bet one could come up with something.

 

I realize that one can always come up with reasons (other than optimism about the economy) why people do such things. I'll keep posting examples, and I realize you'll continue to insist that they couldn't possibly mean anything good.

 

And I'll keep posting data that you'll keep ignoring. Also let's wait and see what he opens up here before you start claiming something ok.

 

And to restate things once again - I am not unoptimistic about about the economy, certainly not for the nation as a whole - I am admittedly less sanguine about the NY area just given the large % of GDP that comes from the Financial Service industry but certainly for many people things will get better - and I would appreciate it if you would remember that before you claim I said things I never said.

 

My assertion is, and has always been, that the entire high end of NYC - whether it be restaurants, luxury goods, or Real Estate is unsustainable and has more declines in demand ahead of it. I don't think places like, well Cabrito or Fatty Crab are in this category.

 

Despite this, and despite all of your love of posting articles from people incented to convince people that it is ok to spend, I provide you with real data that shows that spending on things that are purely discretionary has not increased. The empirical evidence for Real Estate is that the market is not getting better despite borrowing costs being at all time low levels. Additionally the main engine for consumption at these levels, the financial services industry, is on average going to have lower wages in '10 then it had in '09.

 

But legal compensation rates are increasing, so explain that.

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The other day, i went to a Thai restaurant that was serving 18 dollar side dishes of Pad Thai.. Though, perhaps it is a bad sign that the wine steward had to swipe a glass of wine from me..

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Clearly this was a restaurant failing on its own terms, not a closing predicated on the space being repurposed into something higher and better as you seem to want to imply. As for why he wants to do something higher end? who knows maybe he's realized the walking traffic there isn't enough for the model BarFry and Cabrito had so they are looking to do something higher ticket lower turn.

What is notable to me is not what happened to Cabrito, but what he is choosing to replace it with. Were people doing that a year or two ago? Nope. Back then, either the restaurant would close outright, or it would be replaced with something more casual still. I'm not sure exactly how much more casual you can get than Cabrito, but I'll bet one could come up with something.

 

I realize that one can always come up with reasons (other than optimism about the economy) why people do such things. I'll keep posting examples, and I realize you'll continue to insist that they couldn't possibly mean anything good.

 

And I'll keep posting data that you'll keep ignoring. Also let's wait and see what he opens up here before you start claiming something ok.

 

And to restate things once again - I am not unoptimistic about about the economy, certainly not for the nation as a whole - I am admittedly less sanguine about the NY area just given the large % of GDP that comes from the Financial Service industry but certainly for many people things will get better - and I would appreciate it if you would remember that before you claim I said things I never said.

 

My assertion is, and has always been, that the entire high end of NYC - whether it be restaurants, luxury goods, or Real Estate is unsustainable and has more declines in demand ahead of it. I don't think places like, well Cabrito or Fatty Crab are in this category.

 

Despite this, and despite all of your love of posting articles from people incented to convince people that it is ok to spend, I provide you with real data that shows that spending on things that are purely discretionary has not increased. The empirical evidence for Real Estate is that the market is not getting better despite borrowing costs being at all time low levels. Additionally the main engine for consumption at these levels, the financial services industry, is on average going to have lower wages in '10 then it had in '09.

 

But legal compensation rates are increasing, so explain that.

 

a third year associate at a white shoe firm makes as much as the guy who fetches coffee on an average trading desk (a bit of an exaggeration but not by much).

 

Also...

http://abovethelaw.com/2010/11/associate-bonus-watch-the-2010-bonus-season-is-under-way/

 

it seems comp levels really aren't up very much.

 

We just crunched some numbers. Here are some (very sad) stats about Cravath’s bonus.

 

All-in, pre-tax compensation for a full first-year in 2007 — i.e., a graduate of the class of 2006 — was $205,000. That’s $160,000 (base) + $35,000 (bonus) + $10,000 (special bonus).

 

All-in, pre-tax compensation for a full first-year at Cravath in 2010 — i.e., a graduate of the class of 2009 — will be $167,500. That’s $160K (base) + $7.5K (bonus) + You’ll take it and like it (special bonus). That’s almost a 20% pay cut for “full” (i.e., non-stub-year) first-year compensation from 2007 to 2010.

 

 

ETA: I acknowledge that I know nothing about big law firms in the city, so if this information is not as indicative as I implied, happy to be told I don't know what I am talking about. That blog seems to imply that Cravath and Skadden historically set the market - now that might only mean in a relative sense, but if comp in the law world is flat on '09 that doesn't seem so good.

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You have to consider the small sample size and the great fluidity in what people describe as high-end or expensive. If ten new "expensive" places open in 2011 then it's considered a trend, one that existing places will be happy to ease into by offering expensive specials, improving the decor, etc.

 

Additionally, keep in mind that there's a huge national foodie trend that reached the bubble stage just as the economic crisis hit - an unusual event but one that's resulted in an entire generation of young chefs existing in a state of frustration with their economic constraints. Their frustration, together with the availability of cheap money, are very likely to result in more serious restaurants opening than economics alone would dictate. Even though it's not viewed this way, France is usually a leader in dining trends (they just can't really grow here as they can in the US), and while the hottest table in Paris this year is still Frenchie, with its 25 Euro menu and garbage fish main courses, many new places are aiming for 60-100 Euro pp on food (Saturne, Frederic Simonin, Claude Colliot). This, coupled with pork belly fatigue and finally an understanding that lefooding, etc. are just PR publications (it really surprised the French when they gave a restaurant an award before it even opened...) is indicating we'll see more people buying 30+ Euro entrees. Another thing I'm seeing here this season is that the very rich are no longer afraid to show their faces and are as happy to book Gagnaire solid for a month (at prices 30% higher than a couple of years ago) as they've ever been. This wasn't the case last year.

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Clearly this was a restaurant failing on its own terms, not a closing predicated on the space being repurposed into something higher and better as you seem to want to imply. As for why he wants to do something higher end? who knows maybe he's realized the walking traffic there isn't enough for the model BarFry and Cabrito had so they are looking to do something higher ticket lower turn.

What is notable to me is not what happened to Cabrito, but what he is choosing to replace it with. Were people doing that a year or two ago? Nope. Back then, either the restaurant would close outright, or it would be replaced with something more casual still. I'm not sure exactly how much more casual you can get than Cabrito, but I'll bet one could come up with something.

 

I realize that one can always come up with reasons (other than optimism about the economy) why people do such things. I'll keep posting examples, and I realize you'll continue to insist that they couldn't possibly mean anything good.

 

And I'll keep posting data that you'll keep ignoring. Also let's wait and see what he opens up here before you start claiming something ok.

 

And to restate things once again - I am not unoptimistic about about the economy, certainly not for the nation as a whole - I am admittedly less sanguine about the NY area just given the large % of GDP that comes from the Financial Service industry but certainly for many people things will get better - and I would appreciate it if you would remember that before you claim I said things I never said.

 

My assertion is, and has always been, that the entire high end of NYC - whether it be restaurants, luxury goods, or Real Estate is unsustainable and has more declines in demand ahead of it. I don't think places like, well Cabrito or Fatty Crab are in this category.

 

Despite this, and despite all of your love of posting articles from people incented to convince people that it is ok to spend, I provide you with real data that shows that spending on things that are purely discretionary has not increased. The empirical evidence for Real Estate is that the market is not getting better despite borrowing costs being at all time low levels. Additionally the main engine for consumption at these levels, the financial services industry, is on average going to have lower wages in '10 then it had in '09.

 

But legal compensation rates are increasing, so explain that.

 

a third year associate at a white shoe firm makes as much as the guy who fetches coffee on an average trading desk (a bit of an exaggeration but not by much).

 

Also...

http://abovethelaw.com/2010/11/associate-bonus-watch-the-2010-bonus-season-is-under-way/

 

it seems comp levels really aren't up very much.

 

We just crunched some numbers. Here are some (very sad) stats about Cravath’s bonus.

 

All-in, pre-tax compensation for a full first-year in 2007 — i.e., a graduate of the class of 2006 — was $205,000. That’s $160,000 (base) + $35,000 (bonus) + $10,000 (special bonus).

 

All-in, pre-tax compensation for a full first-year at Cravath in 2010 — i.e., a graduate of the class of 2009 — will be $167,500. That’s $160K (base) + $7.5K (bonus) + You’ll take it and like it (special bonus). That’s almost a 20% pay cut for “full” (i.e., non-stub-year) first-year compensation from 2007 to 2010.

 

 

ETA: I acknowledge that I know nothing about big law firms in the city, so if this information is not as indicative as I implied, happy to be told I don't know what I am talking about. That blog seems to imply that Cravath and Skadden historically set the market - now that might only mean in a relative sense, but if comp in the law world is flat on '09 that doesn't seem so good.

 

 

As a chef/owner, I tend to side with Bonner on this one. I'm in Jersey, as most of you know, but have many many friends in the city. Demand is to the point where the fear of closing has subsided, but that's about it. There is no ability to push raw ingredient cost increases through to the consumer, further eroding margins. Labor costs are rising, along with uncertainties about tax policy, health insurance mandates, etc. (that was in no way meant to be a political commentary, just illustrative of what owners are BSing about over espresso).

 

The only concessions we have been able to get in the past two years is in occupancy costs--which sort of proves Bonner's R/E point in a round about way. However, even to jump on board with that, you need to prove a 3-5 year track record of success and have to be willing to open your books to your landlord's accountants--always a risky thing in my view.

 

My Holiday private room bookings are up about 25% from last year, 40% from '08 and off about 19% from '07. And pricing is within 5%, on a per/person level with 2007. Now, I don't have the numbers in front of me, but I can guarantee that both my variable costs (food, labor, utilities, taxes) and my fixed costs (occupancy, insurance, etc) have risen FAR in excess of 5%. So, long story longer, I'm not looking to expand--despite several intriguing vacant spaces in NJ--because there is not enough demand to support the necessary price points for a concept to make sense on paper. And I'm talking about everything from a hot dog stand to fine dining.

 

I will add that Mrs. Marauder works in financial services for a major Street firm. Comp in up from 08 levels, about even with 09 levels and laughable compared to 07 levels. AND about 20 people in her immediate group were sent packing yesterday morning--some of them with 25+ years with the firm. The big fish are eating close to 07 levels, but the medium and little fish are not. Don't shed any tears for them, but that isn't the point. We're talking about the engine that drives demand for luxury goods, etc. Just to be clear :D

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