Weathering business cycles

Eye on the (business) weather: Michel Baudouin’s downtown-Asheville restaurant, Bouchon, has weathered the recession, but he always keeps his eye on events that might affect his business. photo by Bill Rhodes

Every business is affected by cycles. Some experience very clear seasonal or annual cycles — think landscapers, summer camps, or ski resorts. Others see ebbs and flows of customer activity that seem to have more mysterious roots. But all businesses are affected by larger economic cycles — a fact made all too clear during the recent recession.

We asked Michel Baudouin, owner of the downtown Asheville restaurant Bouchon, how he has steered his restaurant through such cycles. He says the first key is keeping your eyes open and planning ahead, every season.

“The tourists are not my target market, because the locals are here all year,” says Baudouin. “Locals don’t go out to eat seven nights a week like tourists do, but they still go out regularly.”

But this doesn’t mean that locals aren’t affected by seasonal shifts, he explains. “It all depends on Mother Nature, and that’s where the challenge is,” he says. “In the winter, if it’s cold, that’s fine. But if there’s snow and ice, it’s not good for business.”

Knowing that winter comes every year, Baudouin prepares in advance. “At the end of winter, we start talking about the next winter. We suggest to our staff that they plan in their personal budgets — save during the better part of the year in case there are fewer hours to work during the winter.” In an industry known for high turnover, this approach may contribute to Bouchon keeping so much of its staff, season after season.

But for cycles that are less regular than the changing seasons, it can be difficult to prepare, he acknowledges. Baudouin insists that to feel the breeze of economic shifts, one need only pay attention to the rustling leaves of 24-hour news media. “Usually before it happens in the U.S., it’s happening somewhere else. [In 2007] we heard about large companies that were losing money or laying off workers,” he recalls. “If we didn’t see it coming, it’s because we weren’t paying attention.”

Luckily, Michel was paying attention: Ahead of the recession, he adjusted his business accordingly. “Back in fall 2007 I felt the wind coming. But I decided, we’re not going to raise or lower our prices; we’re just going to come up with some dishes we can sell at a very reasonable price without affecting our bottom line and focus on service more than ever.”

Today, it’s clear that Baudouin made the right move. “We actually grew 30 percent a year during the recession,” he says.

So what’s he noticing in the news these days? “Because of the drought across much of the U.S., the cost of feed is going up,” he says. “Farmers can’t afford to feed their cattle, so they’re sending them to the slaughterhouse. That will make the price of beef drop for a while, but then there will be a shortage next year, which will make the price go up.”

Then he asks, “Could I be wrong? Sure. But it would be the first time!”

Anna Raddatz is development and communications coordinator at Mountain BizWorks.

Mountain BizWorks supports small businesses in Western North Carolina through lending, consulting and training. For more information, visit mountainbizworks.org.