Chicken Diaper Doldrums

With sales down and costs up, restaurants are forced to find ways to cut expenses because raising prices would cause even worse sales declines.

The cuts could in some cases save big money, in other cases come mostly at the margin, and in some instances seem almost pathetic, judging by the Wall Street Journal's account. One tactic, according to the Journal's Raymund Flandez, is "prolonging the life of fryer oil."

Ew.

Other moves include switching to lower-cost vendors and cutting portions. It's unclear whether such cuts will alienate customers any less than raising prices would.

But restaurants "feel they have no choice," Flandez writes, "as some chains are posting some of their worst monthly sales declines."

He offers a rundown of some of the saddest cases: Ruth's Chris Steak House (owned by Ruth's Hospitality) saw its same-store sales fall by 15 percent in October alone while the same figure declined by 10.8 percent at Ruby Tuesday. Sales are also way down at California Pizza Kitchen, Red Robin Gourmet Burger, and, really, just about every other casual restaurant chain and even some fast-food chains.

Big Steaks Management, a franchisee of Ruth's Chris in several eastern states, says it will save $22,000 a year by buying its meat from just one vendor, which will deliver just once a week, a move the franchisee says will reduce freight costs.

Church's Chicken is one operator that is testing the idea of pushing the life of fryer oil from 10 days to 14, which it says could save it $1 million next year.

Distasteful, perhaps (the chain is at least filtering the used oil to make it last), but not as distasteful as the "chicken diaper," which is used to sop up the excess liquid in cases of raw chicken. Church's could save $800,000 by no longer using the chicken diaper.

More prosaically, DineEquity, the owner of IHOP and Applebee's, is consolidating the vendors for the two chains. DineEquity purchased Applebee's about a year ago and has discovered that there is a 75 percent overlap of vendors between the chains. That move could save millions.

Tumbleweed Restaurants, meanwhile, is moving items around on its menu, like so many Titanic deck chairs. It's putting the higher-priced items on the back while featuring cheaper, higher-margin items toward the front. It seems to be working: Tumbleweed reports that people are ordering more of the cheaper items, which has saved the chain $500,000 since January.