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Making Restaurant Week Last All Summer: Bad Idea

As the recession drags on, the restaurant-industry discount promotion known as Restaurant Week has slowly turned into a joke. The "week" became two weeks, three weeks...and now, for the third year in a row, New York City restaurants -- 170 of them -- are making their Restaurant Week last all summer.

Some of the restaurants in the promotion have opted out of serving the requisite $35 fixed-price dinner for the entire remainder of the summer. They're the smart ones.

Lowering prices for a week or two is great. It creates excitement and makes people turn out during a time when business is usually slow. But run that promotion for nearly two months, and those prices don't feel like a deal anymore to customers -- they feel like an entitlement.

Restaurants running this promo may wake up to a sad reality in the fall: Customers are now accustomed to these prices and would like them to be the norm. If prices go back up, they'll stay away.

Restaurant Week's restaurateurs may discover more and more newly frugal consumers don't dine out above that $35-a-plate threshhold. A lot of economists think these changes in consumers' attitudes aren't temporary, and that the new frugality is here to stay.

Participants might do well to think about what they can do to retool their menus to offer dinner in that price range on a permanent basis. If they don't want to, they'd be better off keeping their Restaurant Week participation shorter.

Otherwise, restaurant owners may find themselves in a similar boat to the fast-food chains. Some have been trying to wean customers off $1 menus without success for years now. The fast-food chains that didn't participate with $1 menus such as Wendy's and Carl's Jr. found themselves left behind. A recent example is Pizza Hut, which just made permanent a promotional price that cut large pizza prices in half.

That's the double bind fine-dining restaurants are in now. If they sell cheap all summer, they may be stuck at these lower prices. If they don't, customers may not come at all.

Photo via Flickr user Andrew Stawarz