Corporate entertainment is roaring back

new York
CNN Business

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

He received a reservation, he said, but also a request: “Make sure you spend money.”

Roe explained that executives with corporate expense accounts who used to order $200 bottles of wine are “showing up” and asking for $1,000. His friend didn’t want to get into trouble for throwing a less profitable party. The restaurant’s private room costs $12,000 a night. Lately, it’s always booked.

Driven by the age of Covid With the tax relief window closing at the end of the year, and under pressure to cement ties and reassure customers, companies are now spending heavily to win and eat current and potential customers.

“The last two or three years have been incredibly difficult,” said Thomas Donohue, chief marketing officer at Culinary Solutions, a Sterling, Va.-based food company whose partners and clients include Starbucks ( SBUX ), Hilton ( HLT) and American Airlines (AAL). .

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

January 26 Culinary Solutions hosts elaborate events with celebrity chefs in Washington, DC, Reims, France and Bangkok to celebrate “sous vide” day, the French cooking technique in which the company specializes.

Donohoe declined to disclose costs, but noted that in France, “there may be a castle and Champagne caves.”

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

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

Corporations, hedge funds and especially real estate companies “are realizing that the recovery is about a year away,” said New York event planner Lawrence Scott. “They think the only way to stay in business is to entertain.”

Events are smaller, say 60 guests instead of 200. “They invite the [clients] that will 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, guests typically opt for the $298 chef’s tasting menu — $468 with wine pairings. Business has been boosted specifically, Ripert officials tell him, by the soon-to-expire tax break.

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

This kind of spending, of course, is in direct contrast to what most consumers do when they pay for meals themselves: cut back sharply. Inflation and gas costs are historically high, and recession worries are rising.

Meanwhile, the restaurant industry is still struggling with “staffing, food cost 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 to compete and survive tThe heirs’ relationships are upbeat, especially after years of lockdowns 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 get lazy. They started editing events, and when they come out, they say, “Wonderful that you’re still here, you’re still alive!” ”

In particular, businesses are struggling to attract younger guests and the next generation of businesses, Hay said. “They think: You have to throw an extravaganza.”

During the pandemic, group dinners or parties were rare. At first charity events began to return, then weddings. After that, according to restaurateurs and event planners across the country, came the bars and bat mitzvahs.

But now it’s bankers, watchmakers, real estate investors and executives starting new projects manufacturers, retailers and “tech bros” also offer the most expensive dinners and lavish parties.

Bill Laurie, an auto technology supplier, has begun taking current and potential customers out to dine again at top restaurants in Detroit and Dearborn, Michigan, at 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 hospitality goes beyond spending money to ask them what they think of the market or their family, he said.

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

But, according to the IRS, “an expense is not considered lavish or extravagant if it is reasonable under the facts and circumstances.”

This definition leaves a lot of scope.

“Meal expenses will not be disallowed merely because they are more than a fixed dollar amount,” according to the IRS, “or because the meals are taken at luxury restaurants, hotels, or resorts.”

But even in this more welcoming environment, customer expectations must be managed, Laurie said. Because of inflation, you 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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