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In our last post about a month ago, we asked whether we were seeing signs that the recession was waning, and we listed 6 signs that it may be. This month, we bring you additional evidence that the recession may be ending.

Durable goods orders are up
According to the Commerce Department, orders for durable goods - big ticket items, such as appliances, heavy machinery, and aircraft - posted their biggest one month gain in 16 months and has risen 2 of the last 3 months after 6 straight months of declines.

Home sales are up
Sales of new homes were up in April and according to one economist “the new home sales numbers seem to confirm that the market for new single family homes may have hit bottom in January” and be on the way back up, albeit slowly.

Likewise, sales of existing homes, a far larger part of the market, were up almost 3 percent in April.

Jobless claims are down
Not only was the number of people on the unemployment rolls down for the first time in 20 weeks, but the number of new jobless claims also decreased. The decline in the total jobless benefit rolls (this measures all of the people who are claiming jobless benefits regardless of when they began receiving them) was the first drop since January. In addition, Wal-Mart said it expects to hire 22,000 people for new positions this year.

Economists think the recession will end this year
A recent survey of the National Association of Business Economists (NABE) predicts an end to the recession this year. The NABE is an organization dedicated to analyzing economic trends. Specifically, 74% of NABE Economists surveyed believe the recession will end in the 3rd quarter, while another 19% (93% total) think the recession will end by year end.

What does this mean for business owners and restaurateurs in particular? Maybe it’s time to turn that defensive posture around and invest in your business. Coming out of the recession, businesses that are positioned for growth will be better able to absorb the market share left up for grabs by the companies that didn’t survive. Is your business one that is positioned to grab that extra market share?

If you are a restaurateur thinking about increasing marketing, making capital expenditures, or otherwise investing in your business and looking for a restaurant loan, try Advance Restaurant Finance, LLC (ARF). ARF has been making short term business loans to restaurants for almost a decade. Despite the economy, ARF never stopped making business loans to restaurants, and ARF makes restaurant loans up to $1,000,000 per location. If you are looking for a restaurant loan, ARF is one of the first calls you should make.

If you peer through the haze of gloom and doom, you may just glimpse several encouraging economic developments. Could it be that we are seeing indications that the recession may be waning? Let’s look at 6 positive signs.

Index of Restaurant Activity up for the 3rd straight month. The National Restaurant Association’s comprehensive index of restaurant activity has risen for three straight months starting in January ‘09. In addition, the Expectations Index, the Association’s survey of restaurant owner’s expectations, rose for the fourth straight month. Also, 44% of restaurant operators plan to make capital expenditures in the next 6 months, the highest level since July ‘08. (Restaurant News Resource, Apr ‘09)

Americans’ leisure travel intentions trend upwards. According to a February TravelHorizon’s survey, the U.S. Traveler Sentiment Index rose in February ‘09 from the last survey taken in October ‘08, indicating an increase in Americans’ willingness to travel for leisure purposes. (Restaurant News Resource, Apr ‘09).

Macroeconomic uncertainty is subsiding. In their paper on economic uncertainty, two Stanford University Economists, propose uncertainty shocks as one of the primary impulses that drives business cycles. They argue that uncertainty causes corporate delay and deferment and as uncertainty subsides, businesses reengage.

Three months ago, these economists may have joined others in predicting a long and painful recession, but now they predict “that the worst has been avoided.” They further claim that economic uncertainty is dropping so rapidly that they believe growth will resume by Mid 2009. (Bloom and Floetotto, The Recession will be over Sooner than You Think, Jan ‘09)

Credit markets appear to be loosening. Dr. Prieur du Plessis, an investment professional with 26+ years experience, concludes that “the credit market tide seems to be turning.” His in-depth look at worldwide credit indicators points to significant warming conditions since the “big chill” last October. (Prieur du Plessis, Credit Crisis Watch: Some Positive Developments, Feb ‘09)

Global commerce indictors on the rise. The Baltic shipping indices are coming to life again. The Baltic Dry Index, a closely watched shipping index and high level indicator of global trends and associated strengths, has almost doubled from its December low. (Mark Perry, Baltic Dry Index, A Leading Economic Indicator, Feb ‘09)

Consumer spending may be ready to thaw. Consumer confidence has surprisingly rebounded. The US, being an economy largely driven by consumer spending, will benefit greatly from an uptick in consumer spending and the resulting rise in retail sales. (CNNMoney.com, Consumer Sentiment in Surprising Rebound, Jan ‘09).

If you are one of the restaurant operators thinking about making capital expenditures and looking for a restaurant loan, try Advance Restaurant Finance, LLC (ARF). ARF has been making short term business loans to restaurants for almost a decade. While the credit markets still may need to loosen, ARF never stopped loaning money to restaurants. If you are looking for a restaurant business loan, ARF is one of the first calls you should make.

In these challenging economic times, restaurateurs are being more and more creative about attracting customers. Read about three ways many restaurants are attracting customers in the current economic environment.

Downscaling the Menu
We have all heard that diners are trading down. Those that dined at P.F. Chang’s are now eating at Pei Wei. Upscale diners become Casual diners, Casual diners become Fast Casual diners and so forth.

But in some cases, high-end restaurateurs are “downscaling” their menus. The once-tony Restaurant Levain in Minneapolis has morphed into the more casual Cafe Levain, and haute-cuisine chef Stewart Woodman, also in Minneapolis, opened Heidi’s, with all entrees less than $20.

In other cases, owners of upscale eateries are opening distinctly down market second locations. That’s true in Los Angeles where Le Dome co-owners Eddy Kerkhofs and Michel Yhuelo have opened Café Colorado, a new concept aimed at a more casual crowd of budget-minded diners with a more downscale menu. Also in California, Beverly Hills restaurateur Jean Leon opened La Scala Presto in Brentwood as a kind of fast-food-for-yuppies version of his swank La Scala.

Menu Ingenuity
Many restaurants, while not necessarily downscaling their menus, are definitely reengineering them. Two ways are half portions and tasting menus.

In New Jersey, Jim Weaver, Owner and Executive Chef of Tre Piani Restaurant and Tre Bar Wine Lounge retooled his menus to offer half sized entrees at Tre Piani, saving customers 25-35%, while adding a tasting menu at Tre Bar, where a diner can get 3 courses for $29-$35 and 4 or 5 courses for $35-$40.

On Long Island, the (Price) Fixe is in. A large choice of 3 course, fixed price meals are now available. The prices vary from the high teens to $30 and many are offered only during what most would consider “off peak” hours, such as dinners from 4:00 - 6:15 or “must be seated by 6:30″ offerings. By all accounts, however, if the timing suits your palate, each of these price fixe offerings constitutes a good value for the consumer.

Hey Buddy, Name Your Price
Really thinking outside the menu, some restaurants are allowing diners to name their own price. The Blue Sage Cafes in both West Linn and Lake Oswego, Oregon offer a pricing system that is very customer friendly.

Customers pay regular price for all drinks, but for the food, people get to name their own price. Workers show diners what they usually charge for the meal, but it’s up to the customer to make the final call on what to pay.

“We want you to have a little say in what you pay, and it’s just like having a coupon only you get to pick what your coupon is,” Blue Sage Cafe Manager Gary Sheperd said. Managers said so far they’ve been happy with the results.

Similarly, Potager, a French restaurant in Arlington, Texas is allowing customers to pay what they feel the food is worth. According to the restaurant:

At Potager, we would like you to ask for only as much food as you know you can eat–you are more than welcome to come back for more–but please, don’t waste it. As a result, we have no set price for our meals.

The restaurant has no waitresses, and customers leave their payment in a newspaper envelope. So far it’s been a hit.

Sometimes change, innovation, and growth take money. Restaurant loans haven’t been easy to come by lately. Some lenders are still making business loans to restaurants, including Advance Restaurant Finance, LLC (ARF). ARF has been providing short term, restaurant business loans for almost a decade, and we still provide millions of dollars in lines of credit and unsecured business loans to restaurant operators every month.

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