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Luis Sanchez
Mrs. Corbett
AP Literature
11 November 2011
Restaurants Attempt to Survive the Recession
Chains of restaurants begin to expand and prosper in America from the years 1990 till
2007. These years provide a stable environment for restaurant owners to provide a service for the
nation. During these years people of all economic backgrounds are more than willing to spend
money on expensive diners instead of conserving their money and eating a homemade meal. At
the end of the year 2007, however, the economy enters into a stage of recession and most citizens
feel the effects of its occurrence. The condition in which the economy is in affects large groups
of people by causing them to lose their jobs, increasing cost of living, and increasing their tax
amounts. All of these results cause a domino effect leading to the downfall of restaurants
throughout the United States. As a result of this domino effect, restaurants face the challenge of
either adapting to the current stage of economy or facing the fact of bankruptcy.
The initial push of the first domino in this effect begins with the first recession.
Dictionary.com defines a recession as a period of economic downfall (“Recession”). Literally
this means the nation as a whole begins to lose control of economic balance. If recessions last
longer than a certain time period, economists assume that the country enters into a more severe
category of recession, a depression. As a result of the current recession, the economy cannot
provide jobs to approximately 6.8 million more people than the typical unemployment

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rate(Rampel).This occurs when companies or small businesses begin to lose money. Since
companies obviously have the intentions of profiting as much as possible, they must cut down on
workers and cut the pay of the remaining workers. Ample numbers of people without jobs will
lower the amount of money in circulation because they will save their money instead of spending
it in restaurants or other businesses. In an indirect manner, companies have not only cut down on
the amount of workers employed, but they have also decreased the amount of possible
customersrestaurantsas a whole will recieve.
This indirect effect happens because people begin to save money with the intentions of
preparing themselves for a more difficult economy. This benefits individuals saving up money,
but it also greatly damages the stage of recession. Healthy economies can only prosper when
businesses can provide a service such as restaurants, and buyers are willing to spend money in
those businesses. Currently, however, people prefer saving up. Instead of going to nearby coffee
shops and buying a latte, people decide to make their own coffee at home (Co). People prefer
making their own coffee because having to buy a latte means they must spend more money than
they would if they made it themselves. This small act does not seem to be such a threat to a
business. Yet, when several groups of people decide to not contribute to a business, it will only
take a few weeks for a lonely coffee shop to go bankrupt because of one latte. One of the most
popular ways to save money is to bring a homemade meal to work versus going out for lunch
(Co). Bringing a homemade meal to work eliminates the need to spend money in a fast food
restaurant. This helps save money for spenders because even over a short period of time, the
amount of money saved is abundant. Suddenly restaurants do not have any clients to satisfy the
supply and demand system.

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Supply and demand works best when the amount of supply coincides with the amount of
demand ("Law of Supply"). Before the recession occurred, the amount of demand for restaurants
was increasing rapidly, and restaurants had to adapt to the demand and increase their supply. In
2007 most restaurants reached equilibrium with the system of supply and demand, but then the
economy entered a stage of recession and the amount of demand lowered. This caused chaos in
the system.Recent surveys reveal statistics showing that people do not only exclude expensive
restaurants as one of their dining spots, but they also have decidedtoeat smaller quantities of food
if they decide to eat out(Brandau). Since the price of food in restaurants is three times as
expensive as homemade meals, people prefer not to waste as much on meals. Restaurant owners
must charge more on the food than what the food is actually worth so that they can profit. As a
consequence, people compare the amount of money they can spend and the amount they should
spend before they choose to eat out or not. Between May of 2008 and May of 2010 there had
been a decline in the number of visits to diners by about 15 percent ("Posh Restaurants
Innovate"). In only a two year time period restaurants all over had felt the decline in clients.
Restaurants must lower the amount of supply, which is the number of restaurants in business so
that they can satisfy the system of supply and demand.
Businesses refusing to lower the supply of restaurants they possess choose to wait it out
and hope for a better future. Those who do not adapt to the new conditions of the recession do
not succeed economically. On the contrary businesses desiring to adapt must realize that the
decline in clients and desire for cheaper prices has become the new normal (Brandau).
Unfortunately, the economy is not improving currently and will continue to decline into the
future. In consideration to statistics about the economy, restaurants continuing to increase prices
and only considering their own benefits normally close down. Some of the remaining restaurant

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businesses are not paying attention to the quality and portions that are needed for people to
choose them over the food on their own stoves (Korkki). Restaurants in this recession cannot
forget the purpose of their existence. They are in business because people desire a form of
enjoyment, and not a place where they spend money with little to no satisfaction. Those
businesses forgetting their purpose in this country go bankrupt or shut down.
When comparing the importance of the appearance of an establishment and the price of
the meals provided, clients value the price of their meals much higher. Several food companies
choose to change up their logos or advertisements with the attempt to bring consumers in without
having to lose a great deal of money. Jack in the Box, a famous chain restaurant, has remodeled
most of their establishments and have even trained their workers in the art of hospitality
(Bernstein). Clients do enjoy pretty places with nicer tables and chairs, but that does not change
the fact that they cannot spend past their budget. Some restaurants even decide to increase the
price of their food up to 15 percent and later attempt to lower their prices again afterwards
(Lindner). These restaurants step out of their limits and even lose their customers in these risky
attempts to earn more money. Failing to comprehend the fact that lower prices are the best way
to earn clients will end up harming the business eventually. The most successful restaurants
currently are the ones able to understand the point of view of the modern day customer.
Historically, businesses, suffering long term effects of economic difficulty have usually
needed even longer terms of time to recover (Ruggless). This does not apply to McDonalds
however. The Dow Jones national average has slid about 31.9 percent, but out of that percent
McDonalds has only slid 3.4 percent which is much better than its competitor, Burger King
(Gutierrez). McDonalds is one of the few companies still expanding its restaurant chain. Not
only around the world but in the USA also McDonalds wins popularity among all other

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restaurants. This company places in the food industry the same as Wal-Mart places amongst
other convenient stores (Gutierrez). These two establishments present similar products as other
businesses do. However, they take a plunge themselves, money wise, and charge a smaller
amount which in the end wins over the customers. Their loyal customers help compensate for
any money lost in their decisions.
Although people do not want to spend unnecessary amounts of money on food they could
easily make at home, every once in a while people want a meal without the effort of making it.
There are few places available where good service and cheap prices are available. One of the few
places includes McDonalds. McDonalds provides a recession friendly dollar menu (Gutierrez).
McDonalds has taken control of the recession and has become the first restaurant to provide an
array of plates for literally a dollar. No other known restaurant can compare to the offer this
restaurant provides; literally leaving this restaurants with a monopoly in some areas. By chance,
large chains of restaurants including McDonalds have the perfect opportunity to continue to
thrive while small businesses begin to diminish in the continuation of the recession (Ruggless).
Small business owners in this industry fail to compete alongside these companies because they
do not have the sufficient funds to lose money for an extensive amount of time without entering
bankruptcy. Large companies can lower their profit for a while and even endure the effects of the
recession until their competitors begin to depreciate. In the end, large enterprises overwhelm the
competition.
Difficult times as the ones occurring currently test the abilities of individuals, companies,
and even the whole country. The recession pushes everyone to see how much they are willing to
sacrifice and how much they refuse to sacrifice. In the restaurant business it is not difficult to
pick out the companies not willing to give up and the ones that have done just the right amount

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of giving up. Ultimately the recession only allows a select few groups to strive and expand in this
economy.

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Works Cited
Bernstein, Sharon. “Jack in the Box Isn’t Springing Back from Downturn.” Los Angeles Times
27 May 2011: n. pag. Los Angeles Times.Web. 9 Nov. 2011. <http://articles.latimes.com/
////la-fi-jack-in-the-box-20110527>.
Brandau, Mark. “Recession Has Changed Long-Term Dining-Out Habits.” Nation’s Restaurant
News 10 May 2011: n. pag. Nation’s Restaurant News.Web. 6 Nov. 2011.
<http://www.nrn.com//recession-has-changed-long-term-dining-out-habits>.
Co, Emily. “12 Ways Everyone Else Is Cutting Back on Spending.” Savy Sugar.N.p., 7 July
2011. Web. 9 Nov. 2011. <http://www.savvysugar.com/Americans-Saving-Money-
18196397>.
Gutierrez, Carl. “Burgers Thrive in the McDownturn.” Forbes. N.p., 11 Nov. 2008. Web. 9 Nov.
2011. <http://www.forbes.com////mcdonalds-restaurants-closer-markets-equity-
cx_cg_lal_1110markets43.html>.
Korkki, Phyllis. “Does Recession Mean Doom for Restaurants?” New York Times 30 Mar. 2008:
n. pag. The New York Times.Web. 6 Nov. 2011. <http://www.nytimes.com/////
count.html>.
“Law of Supply and Demand.”Investopedia.N.p., n.d. Web. 12 Nov. 2011.
<http://www.investopedia.com///of-supply-demand.asp#axzz1dWXVmUxg>.
Lindner, Melanie. “Restaurateurs’ Recession Survival Guide.”Forbes. N.p., 12 Jan. 2009. Web.
9 Nov. 2011. <http://www.forbes.com////recession-marketing-ent-manage-
cx_ml_0112restaurantsurvival.html>.
“Posh Restaurants Innovate to Attract Customers.” Economist 12 Aug. 2010: n. pag. The
Economist.Web. 9 Nov. 2011. <http://www.economist.com//>.

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Rampel, Catherine L. “Second Recession in U.S. Could Be Worse Than First.” The New York
Times.N.p., 7 Aug. 2011. Web. 9 Nov. 2011. <http://www.nytimes.com/////second-
recession-could-be-much-worse-than-the-first.html?_r=1&pagewanted=all#>.
"Recession."Online Etymology Dictionary. Douglas Harper, Historian. 12 Nov. 2011.
<Dictionary.com http://dictionary.reference.com/browse/recession>.
Ruggless, Ron. “Recession’s End Cold Comfort to Industry Still Feeling Its Effects.”
Editorial.Nations’s Restaurant News 3 Oct. 2010: n. pag. Nations Restaurant News.Web.
6 Nov. 2011. <http://www.nrn.com//%E2%80%99s-end-cold-comfort-industry-still-
feeling-its-effects>.