Dining Establishments Feel Impact Of Less Executive Lunches

November 18, 2008 8:34 a.m. EST

Chicago, IL (AHN) - The Internal Revenue Service would probably see smaller representation expenses when companies file their corporate income tax returns next year. Among the cost reductions taken by company officials is a cut in number of business lunches, which are normally charged as representation expense.

The effect of less dining out by both corporate officers and ordinary families was felt by the restaurant industry which reported a decline in revenues for January to September. It is the first time since the recession of 1991 that a dip in sales was recorded, said Hudson Riehle, senior vice president for research of the National Restaurant Association.

For October another first was recorded by the group. It was the fourth straight month of restaurant job losses and the longest manpower reduction in 45 years.

Fine dining chains, mostly steakhouses that are the favorite lunch hangouts of business travelers and convention participants, had a 7.1 percent decrease in sales for the third quarter, according to data from Technomic.

The downturn in the dining business is expected to lead to better service as restaurants compete for lesser patrons. Restaurants are also likely to offer a wider range of prices and more comfort food on its menu which helps retain loyal diners.

Also expected to be on the chopping block is the company Christmas parties in the form of downscaled menus or no party at all. ABC News sent a memo last week to its employees it would not sponsor the traditional Yuletide celebrations this year. Other companies that still plan to observe the yearend holiday are picking less expensive food and wine. That means caviar will be out as appetizer.

Some firms are still planning to hold a Christmas office party to boost sagging employee morale. Peter Horowitz from the Wall Street law firm Shearman & Sterling, explained to the New York Times, "It's important to get people together for a little social event at that time of year, especially when it's been as tough a year as this... But at the same time, you have to make sure that you don't go overboard."