Wednesday, September 20, 2006

More Anecdotes / alltagsgeschichten

auch wenn das nur ein beispiel ist und keinen anspruch darauf hat repräsentativ zu sein denke ich das es sich gut in die datenlage der letzen wochen einfügt. es wird immer offensichtlicher, das
in sachen us konsument irgendetwas "unrund" läuft.

dank geht an mish, george palous und freebuck

George Palous:

Mish, I know that you have been following the troubles in the restaurant biz. Here are a couple anecdotes for you.

I had to meet with an associate for lunch across town so we agreed to meet at an intersection where we knew that there were a number of chain restaurants. We agreed to meet at the Olive Garden. (Love their salads.)

We got there and the Olive Garden was closed down, shuttered and the sign removed. Next door there was supposed to be a Cracker Barrel, well the last time I looked there was one. No Cracker Barrel, no building, just an empty lot. We drove over to the Coyote Grill, closed. Finally found the TGI Friday's was open. I'm not a fan for Friday's but when you are hungry you take what you can get. You would expect that Friday's would be packed on the lunch hour since the three local competitors were closed. But there was plenty of room and quick service. My associate knew the hostess who said that there were a lot of patrons coming in from the other restaurants but it was still slow.

This is a busy intersection right off the freeway exit near plenty of office buildings. Prime location. These restaurants have been in business for at least a decade. They are well-capitalized national chain restaurants. That they all closed in such a short period says a lot about the state of the industry

.PS: Just went past a freshly closed Outback Steak House. Once again, it was in a prime location on the freeway in an affluent suburb.
In a related industry. The Minnesota nightclub business is in freefall. I am a part-time weekend warrior with a guitar and I know this industry pretty well. The nightclub industry has been in a long slow decline since the 1980s as a result of raising the drinking age, aggressive DUI enforcement, and poor demographics. But the change in business over the last year has been shocking. Patronage appears to have dropped dramatically all over the cities. Many of the area's most venerable watering holes are now in bankruptcy. Many are closing permanently. A new smoking ban was just introduced in St Paul and Minneapolis city limits that has devastated the urban nightclub scene. But things are not much better in the suburbs.

Now we are starting to see a phenomenon that I never expected: Lower drink prices. Not everywhere, but in many places. They start in the form of aggressive drink specials. $2 on a weeknight or $1 Tuesday drink and sink. Then bar owners see that cheaper drinks really do increase traffic, so they lower the everyday price. I think that we are seeing the beginnings of a price war. Unheard of in this business.

There is a new trendy mega-nightclub that features national musical acts. I know some of the people who run the place so I often get complimentary tickets for shows. Over the summer I got free tickets for Cheap Trick, Pat Benatar, and Head East. I thought that I was a real V.I.P. until I found out that most of the audience also got comp tickets, and the place still wasn't full for any of the shows. These are big-name national acts that should be able to easily fill a thousand seat club, particularly with free admission. This shows not only how weak the nightclub industry is, but also the concert biz.

Consumers in this part of the country seem to be cutting out a lot of discretionary entertainment. Nightclubs and restaurants may be the early warning signs of a more severe downturn to come. What's next? Sports?

SincerelyGeorge J. Paulos



Anonymous John Fleming said...

The place wasn't full, not even for Pat Benetar and Cheap Trick!?
Even with free tickets. In Flanders(Belgium) they would be fully booked all year. But Flanders is not really aware of it's bubble yet. They're too busy listening to Pat Benetar.

12:39 AM  
Blogger jmf said...

i´m just recovering form the concert yesterday in hamburg.

"billy talent" has really a lot of talent :-)

i agree with pat and cheep trick.

i see this as evidence that the us consumer is in real trouble.

maybe they should put out a "patindex"..... :-)

1:17 AM  
Anonymous John Fleming said...

They'd rather use the 'cheap trick' index!
And what about Germany! Wasn't there a bubble at all? Are the credit standards tighter over there?

2:55 AM  
Blogger jmf said...

good morning,

we have had our bubble after the wall came down. tax breaks and euphotia has lead to a massive overbuilding in eastgermany and berlin. but taht was it. a bubble in overbuildiing and not escalating prices. thank god!

after a heavy percentage of this loans went bad many banks were almost bancrupt (one reason that the hypovereinsbak was sold to unicredit).

after this desaster, the recession and no population growth the banks were not willing to take mauch more risk. their balance sheets havn´t allowed more loans. 10-15 years ago the mortage back securirities (mbs) were not common like today so they have to take all their loans in their own book.

we have had not really one big creiditinnovation the last decade and almost all loans were/are traditional with fixed rates.

10:12 PM  

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