Above poster is dead-on. In bad times, you have to be more aggressive with your marketing. I do the same---bars, coffeeshops, grocery stores, craigslist. Albeit I've have a lot more "I always wanted to fly" followed generally by "oh thats expensive..."
I'm doing okay with students, but would most definitely like more. My problem is with a couple students who can only fly once every couple weeks. I feel that not flying that often allows them to lose proficiency and thus more likely to develop the resignation attitude when they aren't achieving their goals due to disuse of the material. It really does require dedication and time.
Any innovative methods used to 'recruit' students? I'd be interested to know.