Bartering is revived as recession hits hospitality industry

Restaurants are struggling with empty tables and customers who are watching every penny. Owners have to be creative to attract patrons: offering inexpensive recession menus and knocking down prices prove to be a hit.

One or two tables, sometimes three. That was the extent of the patronage on a Wednesday evening at restaurant Cuba Libre, a cheerful eatery in Vijlen, in the south east of the Netherlands, says owner Viktor Terpstra.

But a few months ago Terpstra made a smart move: Wednesday was dubbed ‘recession night.’ On that evening guests at Cuba Libre are able order a recession menu for 10 euros, pay for someone else’s dinner as a gift (the Bos menu – named for finance minister Wouter Bos) or negotiate the price of their diner. Customers can bargain the price of this special three-course meal with the wait staff when they order. Terpstra had to be inventive, he says, you cannot live off of just a few covers per evening, especially if the customers who do come tend to order fewer glasses of wine.

The hospitality sector is facing tough times and has been hit harder by the crisis than any other sector in the Netherlands besides industry. The national statistics office CBS announced last week that turnover in the first quarter of 2009 was 6.1 percent lower than last year.

Negotiating leverage

Restaurant chain Van der Valk - second only to McDonald's - saw turnover decline by 10 percent compared to last year. Top restaurants are also having difficulty; a number of well-known establishments have gone bankrupt over the past months. "Survival is a restaurant's number one priority," says a spokesperson for hospitality industry organisation Koninklijke Horeca Nederland.

It is precisely the restaurants that are being creative that are doing well. They see an immediate average increase in turnover of 12 percent, research shows. "That is largely due to special campaigns which entrepreneurs use to make the recession to work to their advantage," the spokesperson says.

The survival strategy at Cuba Libre continues for the time being. Since the introduction of the recession menu, turnover on Wednesdays has doubled. The negotiated menu in particular has been a success. Customers have been bringing items from home in order to bring the price of their meal down. “You see all sorts of things,” says Terpstra. “On the first evening someone brought in a used television. It was an old thing. It got five euros off his check.”

Other negotiating leverage: an old computer, a lamp, and customers who offer to take their dirty dishes to the kitchen. “This campaign has been nothing but positive for us,” says Terpstra. “More customers, good advertising and when it comes to the bottom line, more revenue.”

A kiss on the forehead

In practice, it goes as follows, as evidenced by a visit to the restaurant. A waiter in a tight suit takes the order. He wants to look like a Cuban mafioso, he says when asked. “That puts up a strong front in the negotiations.” He offers a menu for 35 euros. “You can let me know if you are in agreement, sir," the waiter informs us.

Customers are permitted to offer goods or services in the negotiations. The novel we’ve brought along is met with mixed enthusiasm. The waiter takes the book to the back to check on the internet how much it costs (19.95 euro). He deducts 5 euros from the menu price.

“And a kiss on your forehead, what will that get us?”

"Hmm, 2.50 euro.”

"And if we wash our own dishes?"

“That will bring the bill to 25 euro.”

“Do we get coffee with that?”

“Sure”

“With a cookie?”

“We don’t have cookies.”

“A chocolate then?”

“Deal.”

This kind of bartering has been taking place in British pub The Pigs in Edgefield for much longer. The credit crisis has hit the country village hard, explains Rachel Callister of The Pigs. Pub patrons can pay in goods or services. “Farmers from the area bring in pheasants, a deer or rabbits. In exchange for that they get beer or a glass of wine,” says Callister. “The pheasants are then put on the menu.”

Paid in drinks

The price for a half litre of beer: a kilo of potatoes or meat, ten eggs, three mackerel, or three pheasants. Callister: “That isn’t much, but the area is crawling with pheasants. And alcohol is very expensive in the UK.” It is more lucrative to help out the staff by doing odd jobs. Sometimes someone will fix a garden fence for the cafe, or paint window frames. The babysitter and the gardener are paid in drinks. "Pubs are going under every day," says Callister. “We have to continue to be creative.”

Victor Terpstra of Cuba Libre thinks so too. “When an entrepreneur is in a tight spot, he has to be as creative as possible," he says. And secretly he is not too upset about some colleagues having to close their doors. "It separates the sheep from the goats. Ultimately we all profit from that."