100 South Mill Avenue

Here is more on the subject of consumers who eat out of their own wallet, not an expense account, and how they are trading down to self-service, home meal replacement and fast food. Restaurants that are in the full-service family casual segment are faced with a choice–attempt deep discounting, in which case it is almost impossible to make any profit and your best tipped employees leave (because, not surprisingly, the most bargain-minded customer is invariably a terrible cheapskate when it comes to tipping), or move upmarket and try to start attracting a more affluent customer. Remember, as you can see from the second item quoted below, that in the case of either strategy, the cost of doing business spirals higher each day.

http://www.nrn.com/casualdining.aspx?coll_id=568&menu_id=1426

(Oct. 15) Even as more casual-dining chains dress up their restaurants and menus to lure greater numbers of affluent customers, votes are still out as to whether the strategy works.
[...]
While such chains as Ruby Tuesday, O’Charley’s, The Cheesecake Factory and Red Lobster remain committed to broadening their appeal beyond the lower-income guests that have been adversely affected by high gas prices and the subprime-mortgage crisis, some upscaling casual-dining operators still suffer from the slowed sales that have plagued the segment for the past few years despite efforts to do upgrades.
[...]
Sandy Beall, the company’s chief executive, said officials had underestimated the impact of cost pressures from escalated gas prices and interest rates on middle-income Americans—core bar-and-grill users.
[...]
Consumers are demanding better value, even in the tough economic environment, Hyatt said.
[...]
At McCormick & Schmick’s Seafood Restaurants Inc., officials have stated that they will no longer work to win back the lower-income, or “aspirational,” guest that has defected because of economic pressures, leading to weak traffic in September.
[...]

Last month,[the] chain of 72 units cut third-quarter expectations by as much as one-third because of fewer visits from aspirational guests.

And, in case you think it is going to get any easier for restaurants (cost of goods sold) or the middle-class customers they serve , here are the prime cuts–pun intended– from an article about commodities prices in today’s USA Today:

World events work against grain buyers
By Sue Kirchhoff, USA TODAY

The tightest world grain stocks in about 30 years are contributing to rising food inflation, fueling worries about food shortages in some countries and straining international aid budgets. [...]Prices are being pushed up by bad weather in a host of countries, surging world demand and a drive in the USA and abroad to devote more acres to corn for ethanol production, which has tightened supplies of some grains and tied crop prices more closely to energy prices.
The decline in the value of the dollar has also contributed to surging international demand for U.S. grain. The falling dollar makes U.S. grain more affordable for foreign buyers as their currency picks up purchasing
power. It also makes foods imported to the USA pricier.

Prices are likely to stay elevated for awhile. Global demand is so strong that record crops are needed just to keep up: World wheat consumption has outpaced production for much of the past decade. Better crops next year will not likely allow for significant rebuilding of the grain stockpile, due to increasing demand in surging economies such as China and India[...]Grain prices, along with higher energy and other costs, are rippling through the agricultural sector. Higher feed prices are a factor pushing up the prices of beef, chicken and pork. In the USA, the average price for a loaf of bread is up 11% over the past 12 months. Ground beef has risen 6%, chicken is up 9%, and eggs are up 31%. Overall U.S. food inflation is running 5.6% so far this year, compared with
2.6% for all of 2006. Consumers spend about 10% of take-home pay on food.

[P]roducers had to be lured into planting sunflowers last
year, instead of corn for ethanol. Water supplies are being strained. The ethanol market absorbed more than 15% of the U.S. corn crop this year and could take 30% next year[...] “If you’re concerned about dwindling supplies,
then you might take a look at your biofuels policy. That’s more likely.”