Cayman’s restaurants are reporting that while business is good in the high season, there may be harder times ahead.
Marcus Mueri, part of the NM Ventures team behind Abacus, Deckers and Prime, said that the high season so far has been stable.
“We’re very pleased, but not surprised because always in January to April you need to have business. If you don’t have business in these months it’s not so good.”
At the Hard Rock Cafe in George Town, Colin Doyle said that things were down compared to the glory days of 2007 and 2008, and while it was flat compared to 2010, the feeling is more optimistic.
“Average spend has increased, which is a key indicator.”
He added that the decline in work permits had led to a decline in expatriate business.
“We’ve changed our menu and put our prices down to compensate, which has worked, and now we’re getting more locals in.”
Resident business has also been a feature of the early success of pan-Asian restaurant Karma in West Shore Plaza.
“We’re staying pretty busy; as a new restaurant we are doing very well and our biggest supporters are expats and locals,” said manager Morris Wilkes.
The Reef Grill at Royal Palms has recently invested in a swim-up pool bar area, which Don Lloyd said has helped.
“The pool has been a great addition. The area is now being used day and night. The addition of the pool and changing the menu has enabled us to increase business,” he said.
“It was our intention to hopefully be busier, but frankly I thought it was a way for us to at least maintain our levels of business considering the increased competition there has been. I think eight new restaurants have opened in the past two years with four more coming on line shortly.”
The restaurant’s larger menu and price points have helped, and The Reef Grill is drawing a larger number of young professionals, but operating costs have risen,” Mr. Lloyd said.
“If someone says there is no inflation, you can laugh at them. Everything is up.”
The economic slowdown has already led to the closure of several restaurants. Things are simply not how they used to be, said Martin Pilat of Baccus.
“That’s on the whole island, not just in town. Fewer tourists, fewer people on the island and people spend less; it’s pretty simple. You can easily see it when you see the sales of wine. The price average really went down.
“Plus the costs of [work] permits doubled, import duty went up 2 per cent, and gas went up. Last year was really bad, but right now the high season is what used to be the slow season, and after Easter, nobody knows,” said Mr. Pilat.
He added that the demographic of the clientele, particularly those from the cruise ships, has changed.
“They used to charge $1,000 [for a cruise] but now the cruise companies are charging three or four hundred dollars. It’s a different customer that comes in.”
More people needed
Agua Restaurant and Lounge opened during the height of the recession. Cristiano Vincentini said that while as a relatively new restaurant, they did not have much context to compare, December 2010 and January and February 2011 were already stronger than the same months the previous year.
However, there was one factor that had negatively influenced the makeup of the customer base, he said.
“The island needs more people; when we sit down with other business owners around the island we talk about the increase in work permits [fees], for example. We used to spend $20,000 a year and now it’s $40,000 or $50,000 a year, which is a big change. And especially big companies like law firms and other kinds of businesses which have big work permit fees for managers and accountants.
“This policy is stopping big companies hiring more people to the island, which is exactly the opposite of what we need. We need more people on this island to buy condos, to go out to dinner, to buy land, to supermarkets. We need more people, and I think what they are doing is cutting down the amount of people on the island, which is a big risk.”
Increased competition and new restaurants opening may exacerbate the problem and make things tougher, added Mr. Vincentini.
The rising price of fuel is a huge concern, said Mr. Mueri.
“The biggest problem right now is the gas you’re cooking on. At Abacus our gas bill went up from $1,000 to nearly $2,000, so me and my business partner had a shock and called up the gas company telling them we had a leak.
The gas company came back and said that the usage was the same but the prices have increased quite drastically. And then there’s the power; CUC will also go up.
“The cost of doing business is really a big issue and to stay competitive we cannot overcharge, we cannot overprice.”