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If they build it, will we come?

New restaurants try new strategies for hard times

Ecco in East Boston. Ecco in East Boston. (Aram Boghosian for The Boston Globe)
By Devra First
Globe Staff / October 22, 2008

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Last month multiple major financial institutions failed, a $700 billion economic bailout plan was hatched, and Todd English opened a new restaurant called the Libertine. Right in the heart of Wall Street.

"The whole thing came crashing down pretty quickly," says the chef, whose other restaurants include Olives, Figs, Bonfire, and Kingfish Hall in Boston. "We didn't have any choice. We had to open."

Today's new restaurants are the results of yesterday's plans, often budgeted for and mapped out years in advance. The Libertine, located in the Gild Hall hotel in New York, had been in the works for a year and a half, English says. These businesses are opening in a very different economic climate than the one in which they were conceived.

"A lot of these projects have been on the drawing board and owners can't get out of them," says Charlie Perkins, owner of the Boston Restaurant Group, a real estate firm that brokers restaurant deals. "There are as many new openings today as there were two years ago. Going forward about 18 months, it's looking a little thinner."

The Boston Restaurant Group usually sells about 40 restaurants a year, but for 2008 Perkins expects the number will be more like 30 to 35. "The phones are not as busy as they were," he says. "A lot of the chains are putting things on hold until rents come down or they're able to get some clarity on how the economy's going."

For now, those with new projects must forge ahead and adjust as they go. At East Boston restaurant/martini bar Ecco, co-owner David Modica says they're proceeding mostly according to plan. "The economy goes up and down; unfortunately we hit the bottom," he says. "We own the building. We can take a lot more. Not that we want to, but we're prepared."

English is finding the Libertine's formula works for the times. A section of the menu offers smaller bites - lobster toasties, Scotch eggs, bangers - at lower prices. That section has been doing better than the others, he says. And it doesn't hurt that the Libertine is a pub. "During these times, people drink a lot more."

Many new restaurants are focusing on less expensive, less elaborate fare. At Ecco, nothing costs more than $20, and part of the menu is devoted to tapas. Esti Parsons of Radius plans to open Esti's next summer; the Hingham restaurant, currently in construction, will offer simple, casual food. It's meant to be the sort of place people will come often. Dante de Magistris's Il Casale, slated to open early next year, brings a similar, albeit Italian, concept to Belmont. North End spot Ristorante Damiano specializes in Italian small plates.

"I may have opened a different restaurant five years ago than today," says Ristorante Damiano chef-owner Damien DiPaola. "Then I wanted to do a really nice, white tablecloth, really upscale place with solid Italian food and big wines. Now what I opened up is a neighborhood tapas joint. People can come in, sample two or three things each, drink a couple of glasses of wine, and walk out of here for 20 to 30 bucks apiece. The key right now is bang for the buck, and people have to get it."

Newly opened fine dining establishments can offset more expensive offerings with cafe or bar menus. The two-story Marliave serves modern takes on Prohibition-era fare. Upstairs, you'll find $39 main courses and a $62 three-course prix fixe; downstairs there's a more casual menu with nothing over $18. On a recent Thursday during a Red Sox game, there were customers in the bar area, but the dining room was virtually empty. Chef-owner Scott Herritt says attendance is up at his other restaurant, Grotto, which offers three courses for $36.

At Erbaluce, a contemporary Italian restaurant in Bay Village, Charles Draghi might put less expensive chicken thighs on his cafe menu and pricier whole roasted poussins on his dining menu, then prepare them similarly, with the same sauce or accompaniments. By changing his menu daily, he can adjust as prices fluctuate.

"If suddenly lamb racks are two or three times the cost, I don't get stuck with them," he says. "I like to use a lot of really nice local fish; by using what comes in on boats you're able to adjust. Usually mom and pop places do well; corporate chain restaurants have the hardest time in a down economy. It's a set-in-stone model they can't vary from. Adaptability is everything."

Other restaurateurs are adapting by scaling back on equipment or staff. "As a company, we're going to have to run mean and lean for a while," says Brad Dalbeck, who with partner Chris Damian owns the restaurants Scollay Square, Tavern on the Water, and the new Max & Dylan's, which opened early last month in Downtown Crossing. "Are we going to trim the schedule? Absolutely. We're paying attention to lights being on too much. When it comes to decor, there are certain things you need for eye appeal and feel. But behind the scenes we might cut. Instead of three Frialators, we might go with two. It's a good exercise in business."

Barbara Lynch, whose restaurants include No. 9 Park, the Butcher Shop, and B&G Oysters, is in the process of opening three new places in Fort Point Channel: a bar called Drink (already open), a casual restaurant called Sportello, and a fine dining establishment. She locked in pricing of material and equipment when she planned the project years ago; she is more concerned with how private dining will do this holiday season as corporations scale back on festivities.

"I have a funny feeling we're going to be in a recession for the next five years," she says. "Is it a good time to open a restaurant? I'm not sure."

If she were considering such a project now, would she go ahead with it? "I'd probably start, but I'd probably have a harder time getting financed," she says. "I'm very happy and blessed that I raised money two years ago for this very large project. Trying to raise money now, I don't think that's going to be possible at all for people building restaurants."

Perkins of the Boston Restaurant Group agrees this is a problem. "Higher-end restaurants above $500,000 are not going right now. People can't get financing," he says. And those who can may still get cold feet. "I had a very popular one under agreement, and then the buyer said I want it, I can afford it, but I'm too apprehensive about what business is going to be like with this economy."

This difficulty for some can present an opportunity for others. "The amazing thing about the restaurant industry is it's one of those last frontiers of entrepreneurial endeavor," says Peter Christie, president and CEO of the Massachusetts Restaurant Association. "With a downturn in the economy, sometimes rents and leases change considerably. That is such an important fixed cost in an operating budget for a restaurant. For those people with cash and the available funds, it's an opportunity to speculate."

He doesn't believe the dining landscape will change much. "In spite of what's happening," he says, "I think restaurants will continue to open."

And right now it's a diner's market. The cost of food continues to go up, while there's pressure on restaurateurs to keep prices down and quality high. That translates to stress for owners, but greater values for customers. With dining dollars shorter, there's also more pressure on restaurateurs to keep customers happy.

Says Draghi, "What I find happens whenever there's an economic shakeout, restaurants that aren't that good, where the food or service is mediocre, they tend to not do well and shake out. Restaurants that do a good product and good service do better. People get more selective."

"It's about hospitality," Parsons says. "When things get tight I'd imagine a lot of people would start thinking, when people come in the door, I want to make sure they want to come back."

It looks as though they've embraced that ethos at Max & Dylan's, where free shoe shines are offered on weekdays from 4 p.m. to 7 p.m. Dalbeck and Damian know their target audience. They're also planning a second Max & Dylan's in Charlestown, where Copia once was. This branch, which they hope to open next month, is aimed at tourists and Garden-goers. Dalbeck says it will be welcoming, comforting, and value-oriented.

Sounds like a good bet for bad economic times. But restaurateurs are a sanguine lot - this is a risky business in any economy, after all. Those opening new establishments all echo the same refrain: People still need to eat.

Devra First can be reached at dfirst@globe.com.