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September 21, 2021

Today's economic casualty: upscale steakhouses

You know, for all a media member’s job is to do – tell a story and make it simple – it really must be maddening to read today’s headlines.

Indeed, nothing is as it seems, and what’s this one day is that the other. Want an example? How about this: on Wednesday afternoon, a Huffington Post  headline read, “Obama up 8 points nationally in latest Pew poll.” The next day, from the Daily Mail, “All tied up! Mitt Romney draws level with Barack Obama in latest Gallup poll.”

Obviously, two different polls on two different days yielded two different results. But the point remains. Nobody really knows what to believe anymore.

And such confusion doesn’t just cause eyes to roll and readers to turn. As the economic recovery continues, consumers are still a fragile bunch, sensitive to headlines that either forecast doom or tell them everything will be okay.

A steady stream of both seems to come daily, but there’s plenty at stake amidst the confusion.

*Bing: How to save money by eating out

The latest casualty of a baffled consumer? That would be upscale steakhouses, whose business is fine amid good economic news one day, in the tank after a dooming headline the next.

According to Bloomberg, revenue at American steakhouses has been “more erratic” this year than last, thanks to a relentless up-and-down economic news cycle.

Perhaps it makes sense: while restaurant sales, in Canada at least, are fairly steady now, the game changes when we talk upscale eateries.

Eating out at your Kegs, Morton’s’ and Ruth’s Chris’ -- these are expensive nights, emotional decisions that might be deterred by a down economy. If you read a headline about how your mutual funds are about to take a dive, for instance, you might not feel like a $40 filet.

While sales rise and fall based on economic headlines, Bloomberg  also notes a larger threat to upscale steakhouse business: the cropping of corporate expense accounts.

If business owners are squeezed to cut costs, restaurant insiders note the first thing to get trimmed is often expense accounts at fancy steakhouses, which are used to woo clients but not necessarily for the nuts-and-bolts doing of business.

“It’s easy to go to a fancy restaurant if you’re spending somebody else’s money,” Mike Englund, a chief economist at Action Economics in Colorado, says, “but if your expensive account is cut by 20 per cent, you’ll go somewhere that costs less.”

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...