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The
credit crunch is upon us and the pundits suggest things could well
get worse with no end in sight. Restaurants are one of the major
targets for expenditure cutting during difficult times and there is
no doubt that many will go to the wall in the coming year. Part of
the problem is that the restaurant market in UK has become
overcrowded with too many outlets chasing the available market. This
particularly applies in the ethnic sector and even more so in the
"Indian" sector were the level of 9500 successful
restaurants nationally has never been sustainable.
Market
analysts were already forecasting a lowering of restaurant numbers
due to this congestion but the credit crunch has re-written the
script completely. Market research company ICM recently produced a
poll that quoted 46% of correspondents as saying that they expected
to spend much less in 2009 than previous years on restaurant dining
and MPG's survey put the figure as high as 64%. The Scotsman recently
quoted a survey suggesting that turnover was already 20% down in the
congested market and it was expected to settle at around a third.
This represents a massive revenue stream loss that many restaurants
will find it hard to survive and a clearing out of the restaurant
scene in cities such as Edinburgh is already being predicted in the
toughest trading circumstances since 1990.
Eating
out in Britain continues to grow year on year but as families find
their available leisure spend has shrunk, they seem to have turned to
the supermarkets to grow the "dining out at home" sector
with all major groups seeing a 3% or more rise in sales.
Catering
recruitment agencies are already reporting a 40% drop in vacancies
and one restaurant sale website quotes an increase from 25 units for
sale to 178 in just two months. Combine all this with rising supply
costs and huge staffing difficulties and the outlook seems pretty grim.
It
is not all doom and gloom, however, as all problem periods also
offer opportunities. Movement to value for money outlets has already
been noted as people continue to value the eating out ethnic but at a
lower cost and this sector is likely to do quite well in the present
conditions. This still leaves a vast number of restaurants wondering
where to turn next and there is no easy answer.
The
choice is either to hang on and hope for the best or be aggressive,
either in marketing or in terms or the product offered. Rather than
expecting customers to walk through doors simply because a restaurant
is there is no longer good enough and we have entered a time when
marketing becomes all important, with provision of a good product a
close second. Menu changes, dish innovations, festivals, taster
nights all help to get people in with the hope of growing repeat
footfall and restaurants that seize the opportunity will prosper even
in the present climate. As for the others&ldots;?
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