Friday, April 11, 2008

Believe it or not, sometimes a $13,500 tab is good for business

I'm pretty sure that my opinion on the $13,500 tab run up at Ruth's Chris Steakhouse in Orlando is going to run against the opinion of every single blogger out there, but hear me out before you blast me. First, the story.

When the U.S. Postal Service rang up a $13,500 tab at an Orlando steakhouse, it spared no expense during a five-hour meal that government investigators are calling "abusive" in its extravagance.

The order -- charged to government credit cards -- included more than $3,000 for drinks, more than $500 for shrimp cocktails and almost $900 for mini crab cakes, according to the Government Accountability Office, the investigate arm of Congress.

And then there's the steak.

"The better question is probably what they didn't order," GAO investigator Gregory Kutz said Wednesday. He counted 81 entrees -- including just about every kind of steak -- from the 2006 feast at Ruth's Chris Steak House on Sand Lake Road.

At first blush, that is downright offensive. It sparked a question in my mind, though: Was this pure extravagance or was there a purpose to this dinner? So I read the rest of the story and found this:

McKiernan said the dinner was intended to help woo corporate clients of the U.S. Postal Service, which competes with carriers such as UPS and FedEx for business. "It was just the opinion of the GAO that the cost was excessive," he said.

These included liquid expenses such as Courvoisier, Belvedere and Johnnie Walker Gold Label, according to the GAO report. "Ruth's Chris is a very fine restaurant, and at a fine restaurant, you find fine products," McKiernan said.

Business is still very much about personal relationships, whether the businesses are small, medium, or large. In my life in business, dealing with customers much smaller than the ones that the USPS was wooing, I've seen bills nearly this large. And if you think that was expensive, you should see the money some companies outlay on parties for their customers and prospective customers, usually people just like you and me, at trade shows. The fact is events like this go a long way in developing and securing personal bonds that can be the tipping point that brings in millions and millions of new business, and sometimes prevents other millions of dollars going to the competition. In a vacuum, a $13,500 dollar bill is grotesque. When you consider what the return on investment could possibly be from a dinner like that, it can be a bargain. Would you spend $13,500 if the pay off was potentially $1 million, $20 million, $50 million or more in new business? You bet your butt you would.

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