It used to be a vital part of doing business, but lunch is lagging in downtown areas as workers stay home
April 17, 2023 at 6:00 a.m. EDT
“It’s definitely changed the flow of our business,” Mink said. “It’s changed more to diners coming out for a nice lunch, not necessarily going back to work.”
Business lunch will never die, but it’s evolving as the reassessment of work continues: Professionals who consider lunch an essential part of doing their jobs are going out far less than they used to. Upscale restaurants in big business centers can’t count on commuters and are scaling back offerings and slashing their hours. Corporate cafeterias are upping their game as employers try to make offices more attractive.
Kip Eideberg, senior vice president of government and industry relations for the Association of Equipment Manufacturers, used to go out for business lunch two or three times a week before the pandemic. Now it’s once or twice a week, and he can’t always count on his old standards. The Prime Rib — an old-school steakhouse with tuxedoed waiters where he used to go for lunch regularly — reduced its lunch service to Fridays only and then ditched it altogether.
Paraphrasing Mark Twain, Eideberg said the death of the business lunch “has been greatly exaggerated.” But he concedes that the cadence has changed since the pandemic.
“I think that is a reflection of people’s lunch habits changing,” Eideberg said. “Even if there are still people who value the business lunch, there’s not enough to keep many places in business.”
The loss of lunching has been evident in metropolitan downtown areas that are struggling to recover their vitality. Office occupancy rates have plateaued at half of pre-pandemic levels, despite management efforts to bring workers back to offices more frequently. It’s challenging restaurant owners at a time when their survival is under threat from inflation, causing restaurants to revise operations, raise prices and cut back on staff.
Amazon CEO Andy Jassy said he was “optimistic” that the company’s plan to bring workers back to offices three days a week starting in May would “provide a boost for the thousands of businesses located around our urban headquarter locations in the Puget Sound, Virginia, Nashville and the dozens of cities around the world where our employees go to the office.”
In Washington, D.C., return to offices has been sluggish, and Mayor Muriel E. Bowser has been calling on President Biden to force federal workers back or cede vacant real estate to be converted into affordable housing as the city grapples with the fallout from shifting work patterns.
The district has more dining destinations than it did in March 2020, according to Ella Faulkner, vice president of planning and economic development of DowntownDC Business Improvement District. But smaller breakfast and lunchtime business customers have been slow to return, as has shopping and retail.
“These enterprises rely on a steady flow of office-based foot traffic, which has plateaued at 42 percent to 45 percent of what it was in early 2020,” Faulkner said.
When workers do go into offices or are working from home, many are opting for takeout. Three-quarters of restaurant traffic is currently consumed not at the actual restaurant, or off-premises, up from 61 percent before the pandemic, according to data the National Restaurant Association. Restaurant owners who were loath to get into takeout — which is much less lucrative for operators — have been forced to adapt to survive in the new landscape. Innovation in the form of things such as to-go alcohol sales and quick-service ordering technology has become vital for restaurants that once relied primarily on in-person dining, according to B. Hudson Riehle, senior vice president of the association’s research and knowledge group.
The rise of hybrid work has rewritten business lunch patterns, workers say. Traci Martinez, an attorney with Squire Patton Boggs in Columbus, Ohio, used to go out for business lunch two or three times a week before the pandemic. Now it’s once a week at best, she said.
She’s doing more business breakfasts and business dinners these days. But during the day it seems harder for people to find the time for a leisurely break, regardless of whether they’re working from home or the office.
“People are kind of pounding through lunch,” Martinez said. “I try to alternate to do end-of-the-workday or breakfast meetings to hit people at better times of their day.”
Even in Texas — which boasts some of the highest office-return rates in the country — lunch and happy hour traffic is down significantly, according to Emily Williams Knight, CEO of the Texas Restaurant Association. Business meals from conventions and tourism have become a boon for operators looking to supplement.
“In Houston, I can stand in the middle of the street in the middle of the day where three years ago there would have been hundreds of cars passing by,” Knight said.
Fast-casual restaurants such as salad and sandwich shops have been hit especially hard by the absence of workers stopping in for a quick bite, Knight said. Catering business has “gone sideways.” Restaurant owners have had to get creative to keep their businesses afloat — some have even accepted contracts to make lunch on-site for big companies that are using food as a perk to draw employees back.
For Tracy Vaught, who owns five restaurants in the Houston area, business has become unpredictable. The trickling return of tourists and business travel has helped at her downtown locations, but she can’t count on reliable lunchtime surges.
“It’ll be balls-to-the-wall busy and then not so busy,” Vaught said.
The drop-off in traffic has coincided with a period of hefty cost increases in labor and wholesale food prices. In 2023, overall food prices are expected to rise 7.5 percent, while food-away-from-home prices are projected to rise 8.3 percent, according to fresh data from the U.S. Agriculture Department.
Vaught has had to increase her prices and learn how to schedule more efficiently to keep her margins under control. And she’s experimenting with new ways to draw people in, like ticketed events and offering green margaritas on St. Patrick’s Day.
“We’re trying to show people we’re not asleep at the wheel,” Vaught said. “We’re involved and awake and wanting to do fun things for them.”
A little more than half of remote-capable U.S. jobs are hybrid, according to Gallup’s hybrid work indicator, which has led to a redistribution of restaurant traffic away from downtown areas and into neighborhoods. This has been particularly evident in San Francisco, which has lagged many other big cities because of a higher concentration of tech employees who can do their jobs remotely, said Laurie Thomas, executive director of the Golden Gate Restaurant Association, who owns two restaurants in San Francisco’s Cow Hollow neighborhood.
In the Financial District, things have been slower, especially on Fridays, when downtown traffic is “nonexistent,” Thomas said. Some restaurants that relied heavily on traffic from professionals have seen their revenue plunge more than 50 percent.
“The regular work lunch is just decimated,” Thomas said.
But out in the neighborhoods, lunches are stronger thanks to the rise of work from home, Thomas said.
The same is true for Luca Di Pietro, who owns Tarallucci e Vino, which has a handful of locations in New York City. He’s noticed a distinct pattern to traffic that has emerged in the business district, with Tuesday through Thursday bringing a wave of workers back. Meanwhile, the workday bookends of the week are quiet. His restaurant on the Upper West Side is doing better now than it was in 2019 — only now it’s often populated with workers who bring their computers, looking for a change of scenery while working from home.
Before the pandemic, lunch made up about 40 percent of Di Pietro’s revenue and dinner made up about 60 percent. Now, lunch accounts for 20 to 25 percent, he said. Now he finds himself immersed in a cascade of constant calculus as he tries to remain profitable in an era of rising costs: cutting back lunch services, raising prices, reducing hours for some staff.
“Every week is a little bit of a challenge,” Di Pietro said.
Another reason restaurants in downtown areas might find themselves lacking in lunchtime traffic is because employers are going to greater lengths to make offices attractive, tempting workers to stay on-site with high-end corporate cafeterias.
Jared Walton, director of national accounts and sales operations at Baldor Specialty Foods, said that companies are investing heavily in corporate cafeterias as they try to pull employees back to offices and compete for workers in a sardine-tight labor market.
Gone are the days of prepackaged sandwiches and simple salad bars. Now employers want margarita pizzas from wood-fired ovens, black angus burgers with special cheese from Vermont, Walton said. He’s gotten scores of requests to set up farmers markets — with local, organic produce — inside corporate cafes.
Employers are “asking more questions” of operators, driven by employee desires: “Not only do I want local, organic, sustainable, heritage heirloom tomatoes, but I also want it grown by a minority farmer,” Walton said. “These are the things that are now important.”
