A case study on surviving the recession.

When a recession occurs, it is usually those businesses that sell luxury goods and services that are hit the hardest. One of New York’s priciest restaurants could be expected to be one of those to suffer a major decrease in revenue during the 2007 – 2009 recession but the managers made some brave decisions that resulted in not only short-term survival but long-term growth.

These included

- not reducing staff

- making a $100,000 donation to charity

- doubling their media budget (very much related to the above)

- increasing prices by 5%

And while some costs were cut, these were only those that didn’t directly impact on the customer experience, such as renegotiating energy and water contracts.

There are lots of business concepts that could be discussed including price, income, and promotional elasticity of demand. Asking the class why it might make sense not to downsize your highly trained staff in a recession will also help to tease out short-term vs long-term thinking.

The link for the article is here.