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Luxury businesses rebound – and not just because of economy

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Christopher Lynch, left, buys a ticket from Lorraine Brown in the box office at American Music Theatre in Lancaster County.
Christopher Lynch, left, buys a ticket from Lorraine Brown in the box office at American Music Theatre in Lancaster County. - (Photo / )

When the economy takes a tumble, upscale nonessentials can show the results fast.

"The middle class starts to cut down and buy what the lower class usually does," says Dmitriy Krichevskiy, assistant professor of economics at Elizabethtown College. "The upper class buys what the middle class usually does. And the luxury group feels that immediately, because they don't have anyone coming to them."

That happened in 2008, Krichevskiy says, and also to some extent following the 9/11 attacks, which had a comparatively small financial impact. It's economic but also quite emotional, he says, which can explain why even people who still have plenty of discretionary cash after a setback may not feel like consuming as conspicuously.

But when the mood and stock market swing back up, so do indulgence businesses. And that has happened; Krichevskiy says that sector has been doing fairly well lately, as the wealthy again feel inclined to splurge.

Local businesses that fit the profile say, yes, times are good right now. But they also say getting here wasn't just a matter of holding on until the winds of fortune blew in their favor again. They trimmed their sails, adapted their offerings to their altered circumstances and broadened their customer bases, with the middle class playing a large role.

Sight & Sound Theatres, for example, has completely revamped its product development and business models. It's still doing original live theater based on Bible stories, but Maria-José Tennison, director of marketing and guest services, says that, whereas shows used to run for years, now the company is circulating through them more rapidly. And its target audience used to be the 55-plus crowd, many from afar, but Sight & Sound is now also consciously cultivating women ages 35 to 54 with children in its own backyard — within 100 or so miles of the theater in Strasburg Township, Lancaster County.

For many patrons, Tennison says, the Sight & Sound ticket prices are a pretty big investment. Patrons are not necessarily wealthy, and they're thinking harder before making the purchases.

The recession "really impacted people's mindsets," she said. "I'm not sure we will ever go back to the way people thought then." That people are choosing to spend those more tightly held entertainment dollars at Sight & Sound means the company's intentionality is working, she says.

At American Music Theatre in East Lampeter Township, marketing manager Michael Rathfon says he has heard that the concert business did better during the recession than other parts of the music industry, and he believes it.

"The fan base was looking for something to do that wasn't a trip to the beach," he says. "What comes to you is a concert."

In that equation, Rathfon says, what matters is not so much that concert tickets cost more than buying music, but that they cost less than the beach. The recession was definitely felt, he says, but with double-digit sales increases in the past two years, "we're just about at the same point we were before the recession hit."

AMT bills itself as "the only theatre of its kind in the country that features both touring concerts and original shows," and Rathfon says that mix has become more distinctive as market preferences became more apparent in recent years. AMT opened its doors in 1997, Rathfon says, but it is in the last three to five years that it has really solidified its position in the cultural and business community.

"Country has grown stronger and stronger for us," he says of the concerts, reeling off a list of stars who have graced AMT. "We've played that up more."

But for bus groups, which have a weighty part in AMT's business, it's the original shows — particularly musicals — that are the biggest draw. AMT references a Harvard Magazine article from last year that says Broadway theater audiences tend to be affluent, with nearly two-thirds having annual incomes above $75,000 and are 66 percent female.

"We have variable price points across the board that can attract folks on the low end or the high end," Rathfon says. "I think that strategy probably played to our benefit."

Char's at Tracy Mansion has a much shorter history than AMT. The Harrisburg restaurant opened on Oct. 16, 2012, and proprietor Char Magaro says things are going "great — better than expected."

"We know we're at the top of the market," Magaro says of the prices at her eponymous establishment.

Opening when financial markets are doing well for upscale consumers certainly didn't hurt Char's, but there are other explanations for its success, too. Novelty has charms, she says, and "high-end food hasn't really been affected that much. People get immediate gratification from it, and people still have special occasions to celebrate."

Her former restaurant, Char's Bella Mundo, had a great year in 2008 despite the economic conditions, she says.

Finally, Magaro says, Char's purposely provides offerings such as smaller plates and a twice-weekly prix fixe menu that features a three-course meal at roughly the cost of some of Char's regular entrees.

"Our goal was to offer Harrisburg a high-end restaurant that most people could afford," Magaro says.

It makes sense economically, but it is also an expression of her personal philosophy. She has, she says, been thanked "for making one of these beautiful mansions on Front Street accessible to the public."

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