Why One of London’s Biggest Steak Restaurants Has Started Discounting

The operations director of a high-profile and lauded London steak restaurant group this week made the surprise announcement that his restaurants would, for the first time, start offering discounts on premium cuts of meat, in a bid not to save money, but to increase morale within the business. Dave Strauss, who leads a portfolio which includes Zelman Meats, Goodman and Burger and Lobster, said on Twitter that the restaurants “...didn’t make any money, but more people [came]. It’s definitely more fun to lose money with a fuller restaurant.”

What this means in practice is that Zelman Meats Old Bailey is offering fillet steak on Mondays a £5 per 100g, half price smoked beef short ribs on Tuesday and 50 percent off wines on Saturdays. A special offer at lunch, for two, is now priced at £25. Strauss says the offers mean it is “cheaper than eating at home.”

In total, Strauss is responsible for 18 restaurants in London, the majority of which are “performing really well,” he told Eater. It was one or two that didn’t work, whether because of location, competition, or simply the combination of factors that has impacted a number of previously immune businesses since the Brexit vote (and since the business rates increases in April 2017.)

“We were looking at the ones not performing and asked ourselves, ‘what are we trying to do,’” he said. “We can deal with the fact that it won’t make money. But not an empty restaurant with unhappy staff. It’s not why you get into this business. [Too many] get caught up in the money.”

He also pointed out that there were “probably” a number of “very busy restaurants not making money in the city” but instead personally prefers to be honest about what is and isn’t working, as well as what can be done to try and correct the wrongs.

Eater put it to him that perhaps the size and diversity of his portfolio meant that he was at liberty to take a hit on one or two sites, so long as other, much better performing sites continued to (over) perform and sustain the business as a whole. He, however, preferred not to look at in such terms.

“We just want to be busy — we want the staff to work in a busy restaurant. We don’t have to worry about the money at the end of the week,” he said. Asked though how long he was willing (or able) to stomach losses, he wasn’t explicit. “There’s an idea we can fix the problem, but it’s often overly optimistic: invent a new starter that everyone loves, or something like that. But almost every avenue [to recovery] is closed off.” He also said that no longer can PR, marketing or a new app remedy the wrongs of an industry that is in the midst of a downturn not seen since the recession in 2008.

“We have no issue closing a restaurant. We closed Rex and Mariano [in 2015]. We’d close it if it wasn’t full of good staff.” He also pointed out that the group closed restaurants outside of London, in Bath and Cardiff — not necessarily because they were losing money, but, he says, because “we were running bad restaurants.”

Restaurant businesses are having to learn quickly how to make money in different ways, Strauss says. “Something has to give. The traditional models no longer necessarily apply — because an increase in so many different costs have affected where profits were found. Ultimately, he says, “it has take a business owner to accept that they will make less money. Because staff want more, I want a pay rise, people have mortgages to pay.” It remains to be seen whether owners will apply this kind of altruism across the board, however.

Strauss pointed out that one of the traditional models — one favoured by the casual dining chains, especially — of high volumes and low margins has become increasingly risky in a competitive market. Although the portfolio he oversees isn’t on the scale of those who’ve been hit the hardest — Byron, Strada, and Jamie’s Italian — the principle still applies. He also says that “expensive proteins,” the high-quality steaks that his restaurants purchase, mean that margins are always tight. It’s why discounting has never before been thought of as a viable option. That, and the de-valuing of a premium product, too, of course.

Asked whether the new popularity of veganism and a renewed enthusiasm for vegetable-based cooking had, in his view, affected the appeal of his restaurants, he said: “I don’t think it has affected it, yet. But the next wave of these restaurants will [probably] be very good. Maybe we’ll see a [big] effect in 10 years.”

And although he was unwilling to attribute any real significance to the vegan and vegetarian movements, he did concede that health consciousness, more generally, was a more immediate threat. Specifically, how much alcohol customers consume. Candidly, he said, “We survive because people drink too much. The difference between a good night and a great night [at one of our restaurants] can be whether a VIP table orders a special bottle of wine.

“We’ve seen the golden age of consumption,” he admitted. “Things will change.”

“What we’re doing is paying off our mortgage with our credit card. It’s a different way of doing business, and it might not be traditional.” But, he said, “As long as everyone is enjoying it, I’m in.”