The new fast food entry point - $5.00

Upscale indies take page from QSRs with $5

deals

By LISA  JENNINGS

(July  27, 2009) At the sleek Stonehill Tavern at the St. Regis Resort in posh Dana Point, Calif., guests can now sit in the bar area and feast on barbecued Berkshire pork belly or Maine lobster roll sliders, or snack on popcorn spiked with truffles.

The price? Only $5.

In the quick-service and casual-dining sectors, the $5 price point has emerged as the sweet spot to win the attention of today’s spending-shy consumers, and now the fine-dining world also is viewing the $5 mark as a way to attract value-seeking guests.

Across the country, upscale eateries are proffering their own $5 deals as the recession lingers. And while operators note that the $5 price tag hardly covers the cost of the food, they say that the deals at least induce trial and offer servers the opportunity to upsell at a time when customers are scarce.

At the elegant Asia de Cuba in Los Angeles, guests can enjoy dishes such as crab croquettes, tuna tataki or lobster pot stickers for $5 at lunch—as well as $5 mojitos—on Fridays through the summer.

Boston’s Tremont House of Siam is offering a summer lunch deal of five dim sum dishes for $5.

Across the country in Boston, the upscale Tremont House of Siam is offering a summer lunch deal of five dim sum dishes for $5.

Also in Los Angeles, the high-end Japanese robata grill restaurant Katana is offering a $5 Happy Hour menu featuring robatayaki skewers, sushi rolls and cocktails every evening during certain hours, with extended hours on Sunday.

While such promotional discounts are not unusual among upscale restaurants, operators such as Patric Yumul, vice president of operations for The Mina Group, which owns Stonehill Tavern, said, “We have never been as aggressive with pricing as we are now.”

Yumul said he has “taken some cues” from the quick-service world, where Subway set the standard with the successful launch of a $5 Footlong last year and chains across the sector scrambled to respond with meal deals priced at $5 or less.

Similar deals are also available at the San Francisco-based Mina Group’s Bourbon Steak concept in Washington, D.C., located in the Four Seasons Hotel there.

“With the price at $5, we’re barely covering the cost of ingredients that go into the dishes, but our hope is to offer the guest value and still offer the experience of sitting in the dining room,” he said. “People can sample three or four different things if they want, or they could have a couple of cocktails or glasses of wine, rather than just one.”

Both restaurants are also offering value-positioned three-course prix-fixe dinners—for $39 at Stonehill Tavern and $49 at Bourbon Steak—featuring classic American dishes, the comfort food that recession-weary consumers seem to want these days, said Yumul.

So far, the buzz has been positive and Yumul said the response has been favorable. If the trend continues, the $5 dishes may remain on the menu, he added.

In Los Angeles, Mark Kozak, food and beverage director for the Mondrian Hotel where Asia de Cuba is located, said the $5 lunch menu was designed to build lunch traffic. The $5 menu, available through Sept. 25, features nine choices, including several of the restaurant’s signature dishes in smaller portions. The price is so low it even beat the $6 parking fee, so the hotel decided to bring that down to $5 for the Friday lunch, which lasts from 1 p.m. to 4 p.m.

Kozak said the $5 price point is tempting psychologically.

“I think it registers in people’s minds. ‘Oh my god, it’s only $5,’” he said. “My check average is typically in the $35 to $40 range, so this is a severe departure for us. But we looked at it as a way to showcase what we do.”

Kozak said his sales team does a good job of upselling on the $5 Fridays. Generally, customers aren’t ordering one $5 dish alone.

At the Tremont House of Siam, however, manager Jas Debeau isn’t as happy with the results of the five for $5 lunch offering.

“We wanted to show customers about our appetizers, to get them to try,” she said. “But sales are not going as well as expected.”

Still, Debeau said the restaurant has committed to the promotion through the summer.

For Lee Maen, partner in the Los Angeles-based Innovative Dining Group that operates Katana and the Sushi Roku chain, the $5 price point is not new.

“It’s always been $5 at Happy Hour for us,” he said. “But before, Happy Hour was secondary. Now we’re putting it into the forefront because people are looking for deals.”

The restaurant has expanded the number of options available for $5 and has tried to make sure the menu includes unique items that would draw in diners.

Despite the difficult economic climate, customers are not filling up on the Happy Hour menu and skipping dinner, he said.

“Sales at Happy Hour are incremental,” said Maen. “But we’re not losing a diner to Happy Hour. We’re still hoping they’ll stay for dinner.”