Weekend America

New Restaurant + Bad Economy = Crazy Idea?

Sarah Gustavus

JANUARY 3, 2009

The Cast Iron Cafe

(Sarah Gustavus)

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Going out to eat this weekend? Don't be surprised if the restaurant manager seems just a bit more cheerful. Restaurants have gotten a bit of break lately. Cheaper gas has meant lower food prices, cheaper ingredients. But Moody's Investment Service reported last week that restaurants still have a tough road ahead of them as businesses because it's so hard to refinance debt right now. Still, some ambitious restaurateurs are moving ahead with their dreams. In Albuquerque, New Mexico, the Cast Iron Cafe has just opened for business. Reporter Sarah Gustavus tells us what it's like to open a business in the midst of an economic meltdown.

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The current economy has many Americans holding on to their pocketbooks a little tighter. That's making many business owners nervous, but two entrepreneurs in New Mexico are confident. They believe that even if people cut back on vacations and big ticket purchases, they'll still keep going out to eat.

Tim Ackerman and Joey Minarsich recently opened the Cast Iron Cafe, a cozy comfort food diner in Albuquerque. Many restaurants fail, even in the best of times, but they've opened a restaurant in the middle of a recession. Ackerman says friends and family are nervous for them.

"If we fail, people will obviously say, you should have known it was going to be a failure, because look at the economy, look at the situation, and all's I say to that is ok but if I succeed, you better be ready to call me a genius."

Ackerman and Minarsich think they have a recipe for surviving the downturn. First, the Cast Iron Cafe is affordable. It offers a local specialty of green chili and cornbread for $5. Joey predicts people will cut back on vacations, but won't stop going out to eat.

"They make take a step down in price and start going to restaurants that are a little more inexpensive. They may even go out the same number of times, they may just may, instead of going to the place where their average guest check is $25, they may go to the place that it's $15 and even go the same number of times a week. Or there are people that just don't quite go out as often, but still go to the same restaurants, we thought we might be able to catch all of those people if we played our cards right."

Minarsich and Ackerman decided to serve food with wide appeal. They crafted a menu of made from scratch comfort foods, and there's a chance that their Tennessee pulled pork sandwich and Iowa chicken pot pie could soothe people's spirits during tough times. Ackerman says they didn't specifically plan the menu for the economy, but it's an advantage right now.

At a recent Sunday brunch, business is a little slow, but there are signs of hope in repeat customers, like Mary Compton who is here to meet a group of friends. She likes the prices and says, despite the economy, she and her husband still eat out because it's convenient.

"I think we've cut back a little, but so far, so good for us. We both still have our jobs. It's had a little effect, maybe we don't splurge quite as much, but often we go out at least three times a week because of our schedules."

Customers are coming out, but the economy has affected the Cast Iron Cafe, and in a way that has caught Minarsich and Ackerman completely off guard. They thought a recession would make it easy to attract employees, and they were right. Ackerman and Minarsich got over 150 calls on an ad that ran just one day in the local newspaper, but keeping them has been another story. Ackerman says they've gone through 30 employees in the first month.

"I've worked in a lot of restaurants and I've never seen anything like this. We've had like 3 days fully staffed here because we've had so many people not coming in, or having crisis or having to leave."

Ackerman believes the current economy is making life more chaotic for employees. He says people are struggling with stress from financial problems or even addiction. He says he tries to help good employees, like one young man who was living on his car, stay on the job.

"My big argument is always, 'OK I understand you're having tough times and I'm willing to work with you on this, but I can tell you losing your job isn't going to help the situation.'"

That young man eventually stopped showing up to work, and there wasn't anything else they could do. Ackerman and Minarsich aren't social workers, they're restaurant owners and they need to keep the place going. So they've have been working more than 100 hours a week. Ackerman says they are spending more time working in the restaurant, chopping onions and making pot pie, than marketing and fine tuning their business model.

Ackerman says that means putting future plans on hold to keep the green chili flowing today, and he's hopeful.

"I think we are going to make it, and in some ways that's just a matter of figuring out how to do it every single day."

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