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Why Wall Street’s Iconic Steakhouses Are Empty

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Steps from the New York Stock Exchange, only a handful of tables are occupied at Bobby Van’s Steakhouse. Across the street, Reserve Cut has scores of empty seats. A few blocks away at Delmonico’s, one of the few diners is the restaurant’s own hostess, seated at the end of a half-empty bar.

It’s lunchtime on Wall Street, but it’d be hard to tell by peeking inside some of its most famed establishments. The TVs are silently tuned to the business news, documenting another topsy-turvy day in the U.S. stock market — and one that’s, yet again, kept traders and bankers chained to their desks.

“This is very, very quiet for us,” Carin Sarafian, a sales and marketing director at Delmonico’s, said one recent afternoon as she sat in an empty dining room. The upscale restaurant, which has been serving up porterhouse and ribeye steaks to finance types since opening in downtown Manhattan in 1837, gets as much as 75% of its weekday sales from business diners.

Head up to midtown, where many hedge funds and banks are based today, and the high-end steakhouses look much the same, with tables aplenty at Smith & Wollensky, Sparks Steak House and Wolfgang’s Steakhouse.

Global Turbulence

It’s a scene playing out with uncommon frequency as financial markets all around the world have been jolted by bouts of turbulence day after day. In the U.S., daily moves of 1% or more in the Standard & Poor’s 500 Index have been piling up at a rate not seen during the bull market.

Whether it’s because of indigestion or market-induced exhaustion, fewer and fewer have any appetite for that midday filet mignon and scotch.

“The market was definitely a factor, there’s no two ways about it,” said Malcolm Knapp, a New York-based consultant who has been monitoring the restaurant industry since 1970. “You’re dealing with a lot of uncertainty in the market, which means behavior is inconsistent.”

Although a “lousy” day on Wall Street could bring more after-work drinkers, it’s usually at the expense of lunch, he said.

His monthly index of high-end steakhouse sales shows results weakened through February from a year ago, though weather and calendar shifts also played a part. January was particularly bad as sales rose just 2.6%, versus 4.6% a year earlier.

Work Ethic

That slowdown coincided with the S&P 500’s worst-ever start to a year. Volatility was also up as gains or losses exceeded 1% in about 60% of trading days this year — almost double 2015’s full-year average.

“There’s nothing like a little bit of a sharp correction to improve our work ethic,” said John Manley, the New York-based chief equity strategist at Wells Fargo Funds Management, which oversees about $233 billion. “You don’t want to be the guy who was out to lunch when the boss went through trying to figure out who he didn’t really need.”

While the financial-market turmoil has undoubtedly contributed to the sense that business is slower than normal, Delmonico’s Sarafian says her restaurant had its best week of the year just after the stock market rebounded in mid-February.

And after hours, many of its regulars are just as likely to knock back a round after up days as they are to drown their sorrows following a rout, she said.

Shifting Patterns

Changing lunchtime habits are just a part of a decades-long shift in how investors approach the trading day, said Howard Ward, who oversees $42.7 billion as chief investment officer of growth equities at Gamco Investors Inc.

“There’s been a recalibrating of the Wall Street lunch,” said Ward, whose daily ritual is eating at his desk at Gamco’s office in Rye, New York, some 35 miles from the charging bull statue in downtown Manhattan. When he began his career in 1978, long lunches were the norm. “It was a much more relaxed, slow-moving environment.” Of course, the market was different then — stock-index futures didn’t begin trading for four more years, ETFs and high-frequency trading were more than a decade from inception and daily volume for the S&P 500 averaged less than 30 million shares. That amount trades in mere minutes now — and mostly by machines — while Twitter moves markets 140 characters at a time.

“With this kind of volatility, it’s hard to feel like you can take a break and go chill in some nice restaurant for a while,” Ward said.

Desk Lunches

Recon Capital Partners’ Kevin Kelly says the violence of some intraday moves this year, along with everything from China to the collapse of oil and worries about a global recession, has given this year’s turbulence a starkly “different flavor” from any other time during the bull market.

“We’ve definitely been making sure that we have at least someone who’s on the desk at all times,” said Kelly, Recon’s New York-based chief investment officer. “We don’t really take lunches outside of the office, but lunches are less leisurely this year even if they’re at the desk.”

But this being Wall Street, there’s always a privileged few who seem immune to the market’s up and downs. According to Billy Oliva, executive chef at Delmonico’s, one regular wouldn’t even let the turmoil during the financial crisis disrupt his lunchtime routine.

And his tip after one recent midday meal? $1,000.

— Check out Why Are Advisors Feeling So Blue? A Psychologist to FAs Explains on ThinkAdvisor.


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