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  • irishtimes.com - Posted: October 15, 2009 @ 10:58 pm

    Should we try and drive prices lower?

    Conor Pope

    I’ve interviewed Georgina Campbell, who writes well regarded restaurant guide books, on a number of occasions, most recently in July. When I spoke to her then she said that during a very, very tough time for the Irish hospitality sector, consumers should be careful about applying too much price pressure on restaurants and hotels.

    Speaking at the announcement of the 2010 Georgina Campbell Awards today she said that “many fine establishments have cut costs to the bone and their businesses are now literally hanging by a thread”. She claimed that “prices have often been reduced to an unsustainable level and yet there is constant pressure from the public to make even further cuts.”

    She said that “if for no other reason than enlightened self-interest, we will no longer be able to enjoy our favourite places if they go out of business – consumers need to think twice before pressing for even better bargains.”

    Is she right? Should we stop haggling or driving harder bargains in case we drive the restaurants and hotels that we like out of business?

  • 18 Comments »

    1.
    October 16, 2009
    7:47 am

    There is a fallacy that in business there is some kind of bottom line, below which you can no longer drive down costs (and prices). There is not. It just gets harder once you have picked all the “low hanging fruit”.

    But the quest for improvement in efficiency (ie getting more for less) is – or needs to be – continuous for any business to remain in business, or a nimbler competitor will jump in and grab your business. Same goes for restaurants and hotels.

    So no, we should certainly NOT stop haggling or driving harder bargains.

    Comment by Tony Allwright
    2.
    October 16, 2009
    9:26 am

    Surely it’s as much about the establishment trying to get a good bargain and drive supplier prices down, as much as it is about the customer doing the same thing?
    If some establishments are able to charge lower prices for similar quality, then what exactly would you be paying the difference for? Having a look at neighbouring competition (especially in smaller towns) is a good place to start – it seems to work in the city with many places driving prices down to try and beat the competition.

    Comment by CatNip
    3.
    October 16, 2009
    9:45 am

    Georgina Campbell is obviously being entirely earnest and sincere in the point she’s making but it is nevertheless nonsense. I don’t doubt that restaurants are feeling the pinch as margins were poor even in the good times but if you don’t have the confidence in your own labour to avoid being ‘bullied’ in to lowering your price you shouldn’t be in business in the first place. The notion that people who are experiencing pay cuts, uncertain job security or even unemployment should just voluntarily pay more than they feel they can afford is also absurd. Perhaps the bigger issue is what constitutes good value to the average Irish punter- after all, too many people feel a plate piled high with stodge is just the ticket ( Mashed AND boiled potatoes!) rather than quality ingredients creatively prepared

    Comment by Tom Ennis
    4.
    October 16, 2009
    9:49 am

    There is a natural level for everything. Some restaurants are still above that level, some are at it, and others have delved below it in the hope of acquiring customers. Only time will tell which policy is correct.

    I do think however though, that if you want to drive prices down to peanuts, then you will be served peanuts.

    Comment by Joanne
    5.
    October 16, 2009
    10:22 am

    As low as it can go is when somone can pick up a decent premises with fittings in a distressed sale after that it will be up to the gov. to cut taxes and get rid of the minimum wage. As a customer I dont care who owns the hotels , the market working could be many of the present owners closing down.

    Comment by Liam
    6.
    October 16, 2009
    12:25 pm

    We should definately not stop haggling and certainly stay looking for bargains, even in the good times, how long will it take us to realise that we have been ripped off in this countryfor so long, and then went back for more, we have got to realise that competition is a good thing and that today retailers and businesses who gained in the good times have to go by the will of the people, their customers. I always ask it this your best recession price and a pause is ofter your best line of defence, if they want your business they will reduce their price, the trick is to wait and get back to them. They in their chosen businesses can also avail of the good bargains that are available today just like the rest of us and therefore reducing their costs.
    Breda Keane

    Comment by Breda
    7.
    October 16, 2009
    3:19 pm

    The usual drivel from the usual suspects! Truth is that most restaurant costs are fixed, rent, rates, minimum wage,operating licences, water charges, pest control, all manner of consumables. Those establishments that haven’t decided to start importing dodgy Brazilian beef, Taiwanese chicken and wine that would take the enamel off your teeth I salute you. Trouble is that most Irish people wouldn’t know the difference between good produce and some of the muck that’s out there. While there was undoubted price gouging in the good times, if there is too much emphasis on price people will get what they pay for…not that they’ll know the difference, mind.

    Comment by Garrett
    8.
    October 16, 2009
    4:42 pm

    At Georgina Campbell Guides we consider this argument to be similar to the supermarket vs farmer argument. Do you want to pay the lowest prices possible for produce from God knows where and drive the farmers in Ireland who have a higher cost base out of business by continuing to demand lower prices? Or would you rather pay a little more for higher quality Irish produce, support local farmers etc? These guys can’t compete with cheap imports, it simply isn’t a level playing field.

    In this respect Tony Allwright is speaking nonsense, all businesses have a cost/sales point beyond which it isn’t worth being in business. Many businesses are today just breaking even, a slight tip beyond that and they are insolvent. I know in our own business there are no more savings we can make and are as efficient as we possibly can be, speak to the SFA and you will find that many businesses are the same.

    What Conor failed to include from the press release was that we feel the government should be doing more to help the hospitality industry by reducing VAT, rates etc. These savings can then be passed on to the consumer. All businesses have costs which they have to cover and they also have to make money (or why else be in business?).

    The bottom line is this, if people keep demanding lower prices something has to give – whether that is quality, provenance, or businesses failing. You simply can’t offer something for nothing in business (bar a smile & good service).

    Do you want to eat battery hens? if you do then fine, personally I’d rather pay higher prices for free range and/or organic. But you simply CAN’T demand battery hen prices when ordering free range/organic because it is a more costly raw material. This is our argument, if you want quality you have to pay for it or it will end up not being available later on as businesses close and the food industry will move backwards.

    It is time that people realise that there is a price for everything that represents value to the customer and a reasonable living for the restaurant – we are at that point in many cases. Those that charge less are either running a loss making business or using inferior produce that is being touted as something it isn’t.

    Bob Nixon
    Director Georgina Campbell Guides

    Comment by Bob Nixon
    9.
    October 17, 2009
    11:57 am

    It still comes down to the fact that Ireland is a poor value economy. I spend alot of time in Germany and the resaurants are better and cheaper, and Germany is not a low cost economy. While it might not be the industry’s fault in that it cant control rents, rates etc. Facts are facts. Anyway its only “eating out” if the experience it not worth the price then there are plenty of other things to spend ones money on. In reality many businesses in this sector will go out of business one can only hope that the better ones survive and some new blood can come into the sector at a later date when there is more affordability.

    Comment by Liam
    10.
    October 17, 2009
    8:44 pm

    To Bob,
    Your argument would be all well and good if Ireland were like Japan, a place where you really do get what you pay for. A piece of sushi can cost anything from 1 euro to 25 or even 30 or 40 (yes, a piece, not a whole meal) and the higher the price, the better it is (invariably).
    But what about all the places here which charge outrageous prices for mediocre food (and that’s a generous description). I was at a posh restaurant the other day (thankfully I wasn’t paying) – I won’t say the name but it’s in a fancy hotel next door to the RDS. A starter of scallops cost 16 euros and consisted of precisely 3 scallops – that’s 5 euros per scallop. Mains were at least 30 euros and you had to pay 4 or 5 euros extra for each tiny “side order” of (bland) vegetables or potatoes. And the service was amaterish in the extreme. They constantly gave people the wrong dishes and kept forgetting to fill up wine glasses when they were empty (why do they have to take away the wine for god’s sake???).
    It’s all very well to charge Claridges prices, but you have to give something in return. At their prices this kind of carry-on is completely unjustifiable, If their claims that they have to charge high prices are genuine, then they have to make sure that the food and service they provide are perfect.

    Comment by Jonathan
    11.
    October 19, 2009
    10:25 am

    Bob- absolutely agree that people should be aware that there is a higher cost associated with higher quality and that restaurants have to set their prices accordingly. I don’t think you’ve thought through the consequences of people simply stumping up more for their meals though. A person who eats out twice a week at €25 a pop in relatively lower quality establishments decides to follow your advice and move up the ladder to establishments that charge €40 for their fare. This person is more likely to cut down to one night a week than increase their total spend to €80 so the food industry ends up with a net loss of €10. Granted that’s an oversimplification but the point is valid

    Comment by Tom Ennis
    12.
    October 19, 2009
    2:21 pm

    We are not suggesting that people stop seeking value, we are simply saying they should learn to recognise what value is and to question it all the time.

    A five star hotel has the highest cost base of any hospitality establishment. They have to make money, they are a business. Therefore they have to charge a lot more than another business with a lower cost base. Therefore “value” in a five star hotel has a far higher price bracket than that of a market stall.

    To be honest I feel it is unacceptable to get poor food in a five star establishment but that is a different argument altogether. Did you get “value” Jonathan? Not at all by the sounds of it and this is all we are asking people to consider. Go where there is value on food with quality ingredients, cheap food generally means it is cheap in every meaning of the word unless you are eating somewhere with a very, very low cost base e.g. Periwinkles from a van.

    So Tom we are not suggesting that people pay more, we are asking that they recognise what constitutes value. A hand dived scallop will cost significantly more than one that is not. The reason is pretty obvious. But if someone is selling hand dived scallops for a pittance then I would be very dubious about their claims.

    If you want to eat quality produce you have to be prepared to pay the price and people avoiding restaurants because the one down the road is doing it for a fiver cheaper may be missing the point in many cases. Why is it less expensive? How is it costing less? Does it taste better?

    The other issue here is are you eating to fill your belly or are you eating to enjoy it? Do you care what you are eating? If not then none of this argument is of your concern anyway and you should just eat the cheapest you can find.

    We are just asking people to consider what they are eating and what constitutes value. If they keep asking for lower prices but expect quality produce then this simply isn’t possible, something will give, most likely quality & provenance of ingredients and/or these businesses closing and the principles they practice becoming a thing of the past. We will then be back in the 70s/80s.

    We believe that the government can stimulate the industry through a reduction in VAT rates and commercial rates, even if only temporarily. Our minimum wage has a huge part to play on the price of products in restaurants, as do our high insurance costs, waste, energy etc. All of these are out of the hands of the restaurateurs but if they were cut the savings would surely be passed on to the consumer.

    Comment by Bob Nixon
    13.
    October 19, 2009
    3:01 pm

    What will give Bob is that people will eat out less if they move up the value chain and even more jobs will be lost than otherwise. Like I said earlier, both you and Georgina are clearly sincere and your engagement with the industry is commendable but yours is simply not a solution that will create more than it destroys. The argument about the quality of the Irish palate is valid but probably not going to sway a whole lot of the general public who are probably far more concerned with their own solvency than that of Ireland’s restauranteurs.

    Comment by Tom Ennis
    14.
    October 19, 2009
    4:01 pm

    I think there’s an argument for both sides really. Some places areally are overcharging for what you get – a trendy restaurant on George’s St once charged us €5.50 for a desert named ‘broken chocolate’, intrigued we ordered it and found that it was a saucer of….broken chocolate. CRAP broken chocolate at that.
    On the other hand there are some places that manage to produce good food wtih good products and reasonable prices i.e. Green 19 on Camden St – i go there quite often and the quality is amazing, with good choice. It’s always really busy too, which must be a testament to it’s good value & good quality.

    Comment by CatNip
    15.
    October 20, 2009
    1:34 am

    “Ireland is a poor value economy”. I absolutely agree Liam. Especially when it comes to food.

    When i think of good food at good value in europe i think of France, belgium, spain etc. I never think of ireland. What you get in Ireland is mediocre food, worse service and high prices.

    And it is fuelled by the likes of Garrett above ranting on about the irish not being able to distinguish good cusiine from bad and about prices of all overheads being fixed. Unfix them i say.

    Dublin like many capital cities have a bunch of poseurs hanging around the restaurant and food business who believe they have some superior intelligence when it comes to cuisine which allows them to praise the little in -coterie they belong to and make the rest of us feel that the problem is not the cuisine: it is us.

    Grow up Garrett. There are thousands of Irish people every day dining out in a restos in Brusells, Paris of Provence who return to dublin to a level of food and service which is blatantly not up to european standards and more expensive. They are not idiots. They know they are getting the worse culinary deal right in the heart of their own capital city.

    And as for Georgina …………..please don’t start me ……….

    Patrick

    Bangkok

    Comment by Patrick Hennessy
    16.
    October 20, 2009
    3:42 pm

    Patrick you can easily compare service etc and standards of food between various countries but it is very difficult to compare value without being fully aware of the costs involved for each country. I had a meal for two in Lanzarote and thought it was a bargain at €50, when I thought about it this was far from the truth. Their VAT was c. 5% if memory serves me right, they owned the building for generations so had no lease/mortgage to pay, they have a season that lasts practically all year, their wage costs were a mere fraction of here as were their rates & insurance costs, they buy fish directly from fisherman for a pittance etc, etc. This €50 meal was poor value when compared to similar in a Dublin restaurant that has all the costs outlined above taken into account.

    Tom you are completely missing the point, this isn’t about moving anywhere on the value chain and you have been completely sucked in by the price element of the argument. I could eat out ten times at a takeway at a fiver a piece for €50, but do I want to? We would rather spend €50 on a meal with quality Irish ingredients and eat out once than eat out twice at €20 a meal made of battery chicken, farmed fish from cess pools in Asia etc. If you care about the quality and provenance of ingredients then you have to be prepared to pay for it but if you aren’t then fair enough.

    The point is if people care about quality ingredients they have to be prepared to stump up for it. If they don’t then this argument isn’t for them. A great example is if you see “Fish & Chips” in a restaurant, there is some really nasty, cheap fish farmed in Asia doing the rounds and being sold as “Fish & Chips” (if there is no named fish I would recommend you ask what it is), now you can’t compare this to Fresh Cod & Chips as they are completely different products. But some consumers see only “Fish & Chips” and the differing prices and their mind is made up that one is a rip off, the more costly, quality product is deemed as the rip off. This is ludicrous and the rip off is really the cheap one being sold at a far higher mark up. One fish has been brought up in a hormone, anti biotic filled cess pit while the other is a beautiful, natural, healthy wild fish.

    All we are saying is to question what actually represents value by thinking about what you are eating and buying and if you are driven by quality then seek it out at a good price, but a realistic price, if something is too good to be true then it generally is.

    Comment by Bob Nixon
    17.
    October 20, 2009
    5:21 pm

    to be fair Bob you are missing my point also. I’m not suggesting people should only choose on the basis of price but am simply pointing out the reality that limited budgets are a fact of life now and that if people do pay more for better quality ingredients then they also will be eating out less often- likely causing a net loss in jobs and revenue for restauranteurs. Hard as it may be for you to accept but I am actually the type of person who expects good quality ingredients when I eat out and am never impressed by the supposed value of a plate piled high with stodge, but the money in my pocket only goes so far.

    Comment by Tom Ennis
    18.
    November 2, 2009
    10:29 pm

    There is no point in Bob Nixon explaining about good food. Irish people do not have a tradition of eating out. I often come across people who tell me about the great value in countries like Spain and France but when you quiz them on what they got, you find they are not comparing like with like. I eat out quite a lot in Ireland and I love eating out when on holidays and I can tell you that most European restaurants are similar in price for comparable quality. For instance on a recent holiday in Galicia, a bottle of Martin Codax Albarinho (local wine) was exactly the same price (€22) as in a local restaurant in Ireland. When you take into account the duty, wages etc the Irish restaurant is giving remarkably good value.Those that know,know.

    Comment by John Williams

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