Posted on 03/19/2002 2:01:37 AM PST by Liz
SAN FRANCISCO (Reuters) - When the Internet bubble swelled in the late 1990s, $100-a-bottle of wine flowed like Evian water and entrepreneurs whet their appetites on $70 plates of caviar before diving into five-course, expense account meals.
Now the bubble is bursting for the restaurants that catered to the hard-working, free-spending dot-com crowd.
Many restaurants around this city, long dependent on tourist traffic, are feeling the pinch of the recession. But the loss of diners is especially severe at some of the trendiest places, which had set up virtual assembly lines serving foie gras, truffles, expensive wines and a lot of attitude.
"We were kind of the place for the chic, young, Prada-wearing, cell phone-carrying, CNBC-watching crowd, and for a while we were packed every night," explained Bruce McDonald, owner of the Foreign Cinema restaurant in San Francisco's Mission district.
Foreign Cinema, located in a spacious warehouse, complete with a wall-sized movie screen for diners' entertainment, used to serve 400 people a night. That number fell to as few as 30 late last year, as unemployment in the Internet sector mounted and surviving dot-com companies started watching their pennies.
To try to win back customers, Foreign Cinema recently revamped its pricey French Bistro menu to offer somewhat lower priced American comfort food like pork chops. The film fare has changed, from esoteric foreign films to some cheerier all-American musicals like "Singing in the Rain." Comfort entertainment to go with the comfort food, which it is serving in increasingly large portions.
Foreign Cinema sees its moves as critical to its survival. It wants to reach out to an older, somewhat less stylish crowd that may not have money to burn but has enough to eat out from time to time.
"I do mourn the old days," McDonald said. "Life was a hell of a lot easier and you could count on a lot of money coming in. Now you have to work hard for it."
COOKING THE BOOKS
People who were a part of the dot-com boom here from 1998 to 2000 all recall the good times at San Francisco restaurants, when no expense was spared on the hors d'oeuvres at the launch parties for new companies -- Amazon.com wannabes, which debuted just about every night.
Dinners at four star restaurants became a regular event for many business people and even the most conservative among them stopped noticing the difference between a $25 entree and one priced at $40. Wine prices doubled for no other reason than that the expensive ones sold faster.
"Luxury entertaining was in many ways unrestrained and service companies like public relations firms, ad agencies and law firms were in a position to show only a modicum of discretion in terms of their expenses," said Andy Plesser, president of the public relations firm Plesser and Associates.
Plesser's clients include the high-tech magazine Red Herring, an icon of the dot-com boom that saw its fortunes soar and then crash in tandem with the Internet economy.
Red Herring not only chronicled the monied world around it but also became a part of it. Bonnie Azab Powell, a former writer recalls spending $3,200 on a dinner when the staff interviewed Eric Greenberg, then Chief Executive of the Internet consulting company Scient Inc.
"We had sea scallops that had been flown in fresh from Maine that morning, and this dish of tiny, hollowed out squash in lobster broth with truffles," Powell recalled. "It seemed obscene, but obscene within a context of every day obscenity and overspending."
Although Red Herring today is one of the few new economy magazines that has survived, it does not have a lot left over to spend on parties.
Many people made millions on stock options at the end of the last decade and could well afford to eat out every night. Many others spent beyond their means based on the assumption they would get rich from a future stock offering.
Still others ate well with the money venture capitalists supplied to help them to build dot-com companies. With funding packages of $50 million being handed out like pocket change, the cost of even the priciest meal seemed negligible -- a sea change from just a few years prior when struggling entrepreneurs prided themselves on their diets of Raman noodles.
"The luxuries of fine dining translated into a form of compensation for workers and executives and consultants," said public relations executive Plesser.
Liberal accounting practices used by many dot-com companies also helped the city's restaurants. One located in the South of Market region where most dot-com companies operated, said its most expensive party ever was an Internet software company which, at the time, was toasted in the press and on Wall Street, even though it was losing money.
That same company is now being investigated for creative accounting and one of its former executives has pleaded guilty to criminal charges of reporting nonexistent revenue.
LARGER PORTIONS, AND SNACKS
A disproportionate number of restaurants in the South of Market region have become casualties of the dot-com bust now that the lunchtime office worker crowd is gone and there are not a lot of deals to do over dinner.
Azie, a French-Asian restaurant there, used to have no shortage of diners ordering the $62 five-course tasting menu featuring caviar, scallops, foie gras and beef tenderloin.
Azie recently removed the caviar from its menu, as well as the $16 foie gras ravioli appetizer served with lobster truffle cream, and the $32 ribeye steak with shallot Roquefort sauce.
"Back then, it just seemed showy," said Courtney Vaughn, a spokeswoman for Azie. "It was a status symbol thing. People are still willing to spend money but they are looking for more value. They are looking for larger portions."
Budget diners may still not go for Azie's current menu of $9 wild mushroom soup or $22 grilled salmon, but the restaurant says it is the difference between catering to a moderately upscale crowd, versus one that had money to burn.
Unlike the conspicuous diners who ate all the truffles and drank all the overpriced wine, serious food critics are not mourning the recent changes in the restaurant scene. They are celebrating the return of the unpretentious neighborhood places.
"I don't think it was a particularly great time for food," said Ruth Reichl, editor of Gourmet Magazine. "You saw a lot of silly design, and a big emphasis on the way places looked and on their very expensive wine lists."
Hawthorne Lane, another South of Market restaurant now having an identity crisis, recently removed a number of $500 wines from its selection. It also added a few low-priced pasta entrees, and doubled the number of side orders and appetizers.
Owner David Gringrass said it is a complete reversal of the old menu that was designed to intimidate diners into making their meal an expensive all night dining event, with multiple courses, from appetizer to dessert.
Today it wants to send the signal that people who just want an inexpensive snack are welcome. After all, that is all many people trying to build a company can afford.
Would you like some cheese with you wine sir?
Question: What do you call a former Dot.com entrepenuer with an MBA nowadays?
Ans: "Oh Waiter!"
NR so richly deserved it.
Definitely part of the mortgaged millionaires club, as with their friends. Now they're all in a world of hurt, after blowing their money all around, stuck with houses they can't afford, and a lifestyle they can't give up. Not a lot of sympathy from me to them. As I tell my wife, in America you are free to be as stupid as you want to be.
I practiced the virtues of fiscal self-discipline and restraint throughout the 1990s. I work in a VERY conservative consulting firm, so I'm not that unusual among my peers; but everyone in my business knows SOMEBODY with a $500,000 debt load and a $30,000 income.
A great symbiotic relationship, no?
Works for me.
Tsk, tsk, tsk. I'm about to {{{sniff}}}}choke up......
When people accuse me of going through a second childhood, I tell them I haven't got finished with the first :o)
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