Monday, January 5, 2009

Stratosphere's Fancy Restaurant Cuts Staff Hours?

While I was waiting to go on KNPR's "State of Nevada" program this morning to eulogize Mamma Mia!, a guy named James called in during a discussion of the economic downturn to report that half the employees at the fancy, rotating Top of the World Restaurant at Stratosphere have been informed this week they'd be going part-time indefinitely. (The Stratosphere spokesman has not returned a call for comment yet.)

What was interesting about this wrinkle was that Dave Berns, the host, quizzed the fellow about the cause. (Hear it here.) Stratosphere was bought about a year ago by Goldman Sachs, the troubled NYC investment house. Berns asked James if weaker business or the banking industry mess caused the cutbacks. James doesn't know, but his responses were interesting:

"December is typically slow anyway, that's always been a slow month for us. But I think one of our mistakes was, we raised our prices dramatically here once that takeover was taken. I don't know who made that decision, but I think that that was a driving force. ... We knew that something was coming but this was pretty dramatic because half of us are now on a part-time basis."

James said management said they'd get more hours if business increased. He's clearly distraught:

"We all were numb. Flat-out numb. ... We figured it would be a few of us would have to go, not half. ... We thought we were going to be OK. We're one of those premier restaurants that people want to go to because of our beautiful view ... We always have a draw of people no matter who comes to Vegas. We didn't see it coming. We were kind of blindsided."

This situation raises some interesting questions about the impact of the recession in this particular arena. It's strange that the Goldman Sachs folks jacked up the prices at Top of the World when they did; it reminds us once again what bad business decisions know-it-alls in New York make when they don't understand the Vegas market. (Yes, that means you, Elad.) Goldman Sachs has maimed the only golden goose they acquired in the transaction and who gets to suffer? James and his colleagues.

But, beyond that, restaurateurs are in an especially awkward position in this environment. Hotel rooms and show tickets can be discounted, but by and large there's no such thing as getting a 20 percent off coupon at Picasso or the Eiffel Tower Restaurant. And it is almost impossible to DROP prices on the menus, partly because the cost of ingredients and labor usually does justify the current food prices. (They make the big bucks not on the $150 prix fixe meal but on the 2,000% markups on alcohol, as I understand it.)

What's more, even if a restaurant did lower its prices, how would they tell anyone? Can you see Guy Savoy running coupons in What's On or Aureole taking an ad out in the R-J to announce such a thing? Once a restaurant has a reputation for its price point, it seems impossible -- and, long-term unwise -- to alter that perception.

No, the only realistic way for restaurants to cut costs is to dismiss some of its staff and, perhaps, close sections of its dining area. Hence, James and his colleagues are screwed.

That said, there is one other way. Caesars food headliner Bradley Ogden was on KNPR's State of Nevada last May with a shocking admission: He's taking the same money for smaller portions at some of his restaurants, although he seemed to avoid saying he does at at Caesars. "Rather than serving a 12 oz steak, you serve a 10 oz steak," Ogden says within the first four minutes of that show, linked to above. "For the same price?" Berns asks. "Yes, for the same price."

That strikes me as cheating. On the other hand, I'm not sure which is worse, people with money getting a little bit less food or working-class people losing their jobs. Sucks any way you, uh, slice it.


H.Peter said...

Tough one.

I can't remember what it was a while ago when I lived in Vegas, but during a seasonal slow down, the Puck group had something going about if you are local, be sure to mention it to your server.

Maybe it was just free dessert or such, but there are ways to drive the top line without cutting staff .
Waste for one is a good start. If that means cutting back on portions, so be it.
Have you eaten at Claim Jumper lately?
Same goes for buffets and people's constant "I paid for it, now I want it all" way of heaping food on their plates.

But you do have a more important point about people being in businesses they should not be in.

To be a good restaurateur or chef you need different qualities than a degree in economics.

Anonymous said...

I've only eaten at Top of the World once (and only would do so once) and I could tell you immediately that it was a problem-plagued restaurant, and not just by being over priced, but by having (seemingly) union staff who did not care about service, who clearly had a "serving tourists attitude (i.e. get 'em in, get 'em out, they'll never be here again, so it doesn't matter). The menu was distinctly unimpressive by contemporary Vegas standards. It's a pretty view, but not the only view in Vegas, and if that's all someone's coming there for, as a business, they're screwed. I remember my date mentioning to someone there that she was "local" and it was like she'd told him she had herpes.

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