Dining, out? meals tax revenues show decline

letoilepicFor the first time in over a decade, area foodies are spending less on eating out.

It's no secret that restaurants are struggling these days, but for the first time in over a decade, the numbers–- in the form of meals tax revenues–- are now showing the depth of the decline.

Since the late 1990s, meals tax revenues have been a cash cow for the city and county, as both governments tack four percent on top of every restaurant bill (and they also get 1 percent of the 5 percent state sales tax).

For years, meals tax revenues were a sign of our robust dining scene, increasing anywhere from 4 to 6 percent for the last five years. Even in 2003, when the city hiked its meal tax rate from 3 percent to 4 percent, the coffers got a 40 percent increase in revenue the following year. In 2008, the county hauled in $5.8 million, while the city collected $6.7 million, making it the city's fifth largest source of revenue.

But that trend appears to have halted in 2009. Meals tax revenues collected in May were down nearly 12 percent from the same time last year, according to Robert Walters with the county's finance department.

"We are in a serious economic downturn, and people are simply not spending money," says Walters.

In the City, the latest figures are projecting a more modest decline, 5.2 percent for the just-completed fiscal year, but compared to the boom in revenue just a few years ago, and from where the city's own tax collector sits, the figures don't begin to tell the story.

"There are a lot of hurting people out there," says Lee Richards, the city's commissioner of revenue. "It's the worst I've seen it in 35 years."

In cash-strapped Scottsville, a plan to raise the meals tax from 4 to 5 percent was recently shot down, as restaurant owners complained that it would scare away diners, a scarce commodity these days in the little hamlet on the James River.

Some also feel that restaurants go largely unrewarded by local government for acting as a conduit for such a major revenue generator. In fact, a handful of restaurants on West Main Street plan on forming an association to address the issue.

Governments typically assert that much of a meals tax's revenue comes from visitors. Opponents, however, note that shops that sell stuffed animals only collect sales tax. But restaurant meals get hit with both sales and meals tax.

"Having to pay the city cash semi-annually really affects cash flow, causing or creating the need for more cash on hand or loans," says Mas chef/owner Tomas Rahal. "This is especially unwelcome because [restaurants] are already feeling the pinch from decreasing sales and expensive leases."

Oxo was a seemingly popular Water Street restaurant until it closed last year because, in large part, the owners got behind on their meals and sales tax bills. Across the street, gourmet Italian restaurant La Cucina closed in 2007, and while owners Franky and Meridith Benincasa were rewarded by selling their building, they had some parting words.

"Unfortunately, it's going to be hard for small restaurants to make it in Charlottesville in the next few years," Ms. Benincasa told the Hook. "Rents are so high, and buildings are so expensive, that only chains or restaurant groups can afford to move in."

In France last month, the meals tax was lowered in an attempt to save the small restaurants and caf©s for which the country is famous, according to a recent story in the New York Times. Believe it or not, facing stiff competition from large chains like McDonald's and Starbucks, an integral part of French life is disappearing. In 1960, according to the Times, there were 200,000 cafes in France. Today there are only around 38,000, and more than 2,000 closed last year.

While demographic and lifestyle factors (such as the proliferation of Facebook) get much of the blame for the demise of French caf©s, the Hook's recent launch of Charlottesville Restaurant Week seems to suggest that price means a lot to diners. During a typically slow restaurant season, several of the restaurants participating in the event, which will feature three-course meals for just $25, are already reporting a stampede of bookings.

Might a local reduction in the meals tax, something the National Restaurant Association has been advocating, provide a similar stimulus for the local dining scene? While no such plan is in the works, considering the worrisome decline in meals tax revenue, Charlottesville officials may want to hear what their own taxman is saying.

"People are hurting," says Richards, "and you have to put yourself in their shoes."


ah, you see, i don't go to places like the nook & west main & christian's. & i must have missed the memo that the nook is hip.

BN, i obviously don't know where you go, but i've never had "terrible" service here, & i can think of maybe half a dozen servers who weren't good (though even they are almost always *nice*)--and i eat out a LOT.

Chef and dinner: I have to agree. I rarely eat in Charlottesville anymore. Too many times i have gone to places that are 'so good' to find that the food is so so and the wait staff snobs. i have also watched restaurants get taken over and 'face lift' only to find that the price tag went up, and the food quality went down. A classic example is The Nook. I used to ove going there for basic breakfast stuff. Now its pretense, the food is 'meh' and the price is higher.

There are some places that have been consistent over the years, but most are very hit and miss and rely on being 'hip' as a place to eat.

orchid, they are examples of Charlottesville eating though, and they qualify. Some are long time establishments. Sure, I have gone to some more posh places, but really, my feelings aren' t that much different.

The Nook used to not be hip. It was just a simple place for a simple breakfast. They were bought out and overhauled with a bar and black t-shirts to be trendy. theya re trendy alright. with the crap food and high price tag to go with it.

I don't see what's hip about black t-shirts and club sandwiches. It seems to me that the food quality is much higher than what was served there in the past.

We stopped eating at West Main about two years ago after receiving yet more atrocious service. We used to go there from time to time at night but several times in a row, different servers completely ignored us. And I mean *completely* ignored, like, we weren't even there. The servers were in their 20s, probably college students, with those totally bored/snooty/apahetic personalities. Each time we had to wait a minimum 20 minutes for a server to get to our table......and that was only because I finally got pissed off and went and found somebody to come over. Otherwise we never would have gotten served at all. And after our food was dropped off we never saw our servers again. Had to, once again, hunt somebody down to bring over our check. At that point they would have fully deserved a dine 'n ditch, but I wouldn't do that. But it did cross our minds. This happened several times we've been there, so finally we were just like screw 'em. We don't go there anymore. If you have sucky service, expect to lose customers. I used to be a hostess, waitress and cocktail server at numerous restaurants in different states, so I know how things can be, so I like to cut waitstaff some slack. But there was no excuse for what we experienced there....and the fact that it happened more than once made it worse. It was a trend, not just a fluke occurrence. It was their whole bored/apathetic/snooty demeanor that finally did it for me. They don't care. So you know what...neither do we. Buh bye. Take our money elsewhere.

At Christian's Pizza on Pantops I started to second guess whether I wanted to go anymore because I was just tired of dealing with one of the women who works there who always seemed to be in the throws of *PERSONAL PROBLEMS.* On the phone at the front counter/register with her family, having eye rolling *DRAMA*......as I stand there before her waiting to pay but getting completely ignored (for multiple minutes, I'm not talking 10 or 15 seconds as she gets off the call. The conversation rudely goes on and on, as if I'm not even there.) Nobody wants to be subjected to that. And it's happened several times, not just once. Rude, bad service.

Times may be tough, but you couple that with bad service and it may be why many of these places are getting cut out of people's priorities for where to go to get food.

Yeah. It could be a lot worse.

maybe local diners are finally fighting back against the epidemic of terrible service in this town by closing their wallets and eating at home.

Orchid, unfortunately I have to echo BN's statement... and I'm in the food biz! Cville has really hit or miss service, and that goes for the food too. Many restaurants lack consistency.

There are some great meals to be had here, as well as some great servers, but I'm continually surprised at the apathetic and/or inept service I receive. Things seem to greatly improve when the owners are there.

With the recently completed Mall sans fountains, and gorgeous outdoor dining weather, looks like restaurants downtown are doing a booming business. 5.2% decline given the sour economy is darn good I'd say.
There's even a new restaurant in Belmont trying to open.