How's business? We've just had a good year, actually
Hello, good to see you again. How's business? "Fine thanks. We're doing really well. Just had a good November, in fact." Oh? I heard things were getting a bit tough out there. "Yeah, well, I've heard that, too. And the papers do keep banging on about a recession. But there's no sign of it yet, not where we are."
Does this sound familiar? It's all over the hospitality industry at the moment. "I hear there's a downturn coming. August was bad for London. Not for us, you understand, but for other people."
It's gratifying to be proved right. This magazine was defying the talk of depression several months ago (Caterer, 6 August, page 19), taking the line reflected by David Herrick, vice-president American Express Europe, who says: "It's very easy to get talked into a recession.".
His point is sound, and its validity isn't diminished by repetition. Earlier this year, City analysts were predicting economic gloom as severe as the 1930s. But three things have prevented fruition of this forecast.
First, as Caterer reported last week ("Survival of the slickest", page 30), many companies and organisations made cuts during the 1991-94 recession which are standing them in good stead now. Roddy Watt of Berkeley Scott Selection says that tiers of management removed in the early 1990s have never really been replaced. This time round, companies are already "lean, mean and hungry" and therefore better equipped for any street fighting that may lie ahead.
Second, it may be possible, for once, that note was made of all that pessimistic talk. Action has been taken and anchors put in place before the balloon goes up. The Government (sorry, the Bank of England acting with independent authority) has reduced interest rates. Not by much, it's true, but enough to keep borrowing, and therefore business development, within reach of the ordinary operator.
And finally, many companies and astute managers have simply ignored the storm warnings. They have made little or no adjustment to business plans, and have held a steady course.
The result is that the likes of Granada are showing profits that "… defy recession forecasts" (Caterer, 3 December, page 16); Bass sees "… group profits leap"; and Stakis "… adds to sector's recession-defying reputation".
It may take nerve and steely cool, but defying the so-called downturn obviously isn't a mission impossible. With up to a third of consumers planning to spend more this Christmas than they did last year, the short-term future could be good. And then it's only a year from the commerce-boosting millennium, by which time we should all be saying: "Business is fine, thanks."
Forbes Mutch
Editor
Caterer & Hotelkeeper
