Thai restaurants in New York City are coping with the inhospitable economy by expanding to lock in lower rental rates while building warehouses to reduce operating costs and creating new promotions to retain customers.
Spice Group, which runs the largest restaurant, recently opened a branch in the centre of Manhattan while Thai Pavilion offers a new enticement - the "Big Portion Pay Less" campaign to draw new customers as well as keep its regular clientele.
Lenny Limlertwathee and Kittikorn Lertpanarak, co-investors of Spice Group, say New Yorkers have been cutting back on their spending for dining and also cutting down on outside activities. But many of them still like to pay for special or big events to enjoy life despite the credit crisis.
The poor economy, however, is good for Spice Group to invest in more outlets.
"We decided to open a new branch of SEA (one of its brands) at the Meat Market in Manhattan last month and also opened another branch of Spice Chelsea," Lenny said.
"We are turning crisis to opportunity. Expansion in this unfavourable time the best thing to do right now," Kittikorn said.
Dining establishments in the city centre like Manhattan are growing compared to other businesses in the area, he said. People prefer to go there especially on weekends.
"Eating out in New York is like sex - you can never have too much and it can never be too good," they said.
The group is searching only for the best locations to open more branches due to the lower rent with more space. It is also easier to negotiate now than during booming times.
Another key to consider is to have many branches so that the operator could reap economies of scale in operating costs. Fewer branches of foreign restaurants may entail a risk of failing to reach the breakeven point.
"Among Thai restaurants in New York City, we are the only group that has our own warehouse. The warehouse could help us save 30 per cent of total costs per month," Lenny said.
Building warehouses could also help the group to adjust menus to meet customer's lowered demands.
The group achieved sales of more than US$40,000 (Bt1.3 million) per weekend at its SEA restaurant in Brooklyn. This is a great success that gave the group the confidence to add more units.
The group takes care of 14 Thai restaurants in New York City under various brands including Spice, SEA, Peep and PUUK. All the branches are located in Manhattan and Brooklyn, one of the wealthy residential areas.
With more than 100 Thai restaurants operating in New York City, they are now ahead of Chinese restaurants.
The group is trying to encourage customers to spend more time dining out.
"We need them to come for dinner at least once a week, not once a month," Kitikorn said.
Besides adding branches, the group also renovated some areas in existing restaurants by installing transparent glass and changing chairs to marble, which could draw passers-by to look inside.
Valee Arjariyawat, the owner of another famous Thai restaurant, Thai Pavilion, has expanded into Astoria district in New York City. The move is to prepare for the economic recovery.
Valee said consumer spending power is less than before. Many customers have cut back on their choice of orders to save money.
"If they order a drink, they then don't care about dessert. Customers will no longer order these two things at the same time, but will take only one of that," she said.
Customers sometimes order two appetisers for three people instead of one each.
However, the group is encouraging regular customers by offering a promotion that returns more value.
"We are offering a 'Big Portion Pay Less' campaign with extra premiums and souvenirs so customers stay with the group. The cost at dinner is only $25. That's much lower than in the past," she said.
Thai restaurants in New York are facing a shortage of imported Thai ingredients so she urged the Thai government to solve that problem.