Corporate entertainment has returned

new York
CNN business

Samuel Roe, regional manager for Terlato wines, had business associates visiting a few weeks ago and called a friend at one of New York’s most expensive rooftop restaurants to see if his group could get a table.

He got a reservation, he said, but also a request: “Be sure to spend money.”

Executives with expense accounts who used to order $200 bottles of wine are “showing off” and are now ordering $1,000 bottles, Terlato explained. His friend didn’t want to get in trouble for bringing a less profitable party on board. The restaurant’s private room is $12,000 per night. It’s always booked.

Inspired by a Covid era With tax breaks closing at the end of the year — and under pressure to solidify relationships and reassure customers — companies are now spending big to spoil current and potential customers.

“The last two to three years have been incredibly difficult,” said Thomas Donohue, chief marketing officer of Culinary Solutions, a Sterling, Virginia food company whose partners and customers are Starbucks (SBUX), Hilton (HLT) and American Airlines (AAL). belong. .

“We wanted to reconnect with these people, we needed splashes, commitment,” he said. The company, which operates globally, needed something that would make customers “hop on a plane from Singapore, from Japan” to attend.

On January 26th, Culinary Solutions is hosting lavish events with celebrity chefs in Washington, DC, Reims, France and Bangkok to celebrate Sous Vide Day, the French cooking technique the company specializes in. Donohoe declined to disclose the cost, but noted in France, “there may be a chateau and champagne caves.”

The dining and drinking boom began last summer and accelerated when many Wall Street workers were ordered back into the office in the fall, said chef Eric Ripert of New York seafood restaurant Le Bernardin, a Three star Michelin restaurant which is one of the most expensive in the city.

“It’s like kids go back to school and they don’t want to, but then they get excited,” he said. “It’s like that, but with adults. And tequila.”

Corporates, hedge funds and particularly real estate companies “recognize that the recovery is about a year away,” said New York event planner Lawrence Scott. “They think they can only stay in business entertaining.” Events are smaller, say 60 instead of 200 guests. “You invite them [clients] who keep their boats afloat.”

Le Bernardin’s private rooms have been largely booked for the holidays since late September, Ripert said. And at the restaurant, diners typically opt for the $298-$468 chef’s tasting menu with matching wines. According to Ripert’s managers, business was particularly boosted by the soon-to-be-expired tax break.

Referred to as an extended deduction, “businesses can generally only deduct the full cost of business-related food and beverages purchased at a restaurant for 2021 and 2022. Otherwise, the limit is usually 50% of the cost of the meal,” according to the IRS.

This type of spending is, of course, in direct contrast to what most consumers are doing when they pay for their own meals: slashing costs. Inflation and gas costs are at historically high levels and fears of a recession are mounting.

Meanwhile, the restaurant industry is still grappling with “staffing, food costs and supply issues,” said Food TV celebrity chef Maneet Chauhan, who owns Indian, Chinese and American restaurants in the Nashville area.

But companies feel they have to spend money to stay and remain competitive tHeir relations optimistic, especially after years of lockdown and Zoom meetings.

“Everything changed after Covid,” said R. Couri Hay, a publicist in New York. “People don’t want to go out anymore, they’ve become lazy. They started editing events – and when they come out they say, “It’s wonderful you’re still here, you’re still alive!”. ”

Businesses in particular are striving to attract younger guests and the next generation of businesses, Hay said. “They think: you have to do an extravagance.”

Group dinners or parties were rare during the pandemic. First, charity events returned, then weddings. After that came bar and bat mitzvahs, according to restaurateurs and event planners across the country.

But now it’s bankers, watchmakers, real estate investors and executives who are launching new projects Manufacturers, retailers, and “tech bros” also host the more expensive dinners and lavish parties.

Bill Laurie, an auto parts supplier, has begun inviting current and potential customers back to dinner at top restaurants in Detroit and Dearborn, Michigan, for a cost of up to several hundred dollars per person. “It’s not extravagant if you do it right,” he said.

In this post-Covid era, “people want to feel cared for,” Laurie said. And the hospitality goes beyond spending money on them or asking what they think of the market or their family, he said.

Certainly, there may be some companies that take a liberal view of the IRS rules. The deduction, which was intended to support restaurants during the pandemic, only applies to restaurant meals and only when an employee of the client company is present. And businesses can’t deduct expenses for meals that are “lavish or extravagant.”

But according to the IRS, “An expense will not be considered lavish or extravagant if it is reasonable based on the facts and circumstances.”

This definition leaves a lot of leeway.

“Food for meals will not be rejected just because it is more than a fixed dollar amount,” according to the IRS, “or because the meals are at luxury restaurants, hotels, or resorts.”

But even in this more accommodating environment, customer expectations must be met, Laurie said. Because of inflation, he can no longer say, “Order anything off the menu.” now he says “Even if caviar is on the menu, caviar is not on the menu.”


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