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Restaurants could face quietest festive season since the 1990s

12 November 2009
Restaurants could face quietest festive season since the 1990s

The rate of restaurant insolvencies has risen 25% over the last nine months and, in the run-up to Christmas, the industry could be facing its quietest festive season since the 1990s, says PricewaterhouseCoopers.

Quarter one of 2009 saw a record number of restaurant businesses fail, with 183 companies becoming insolvent. The following six months was a mixed bag for hospitality as the weak pound prompted an influx of overseas tourists and a summer surge in domestic tourists.

However, the number of failures overall is up by 25% in the nine months to September 2009, compared to the same period last year. The insolvency rate is expected to peak again in the New Year, precipitated by the squeeze in spending from both the public and private sectors, and a squeeze on corporate spending.

Stephen Broome, director, hospitality & leisure, PricewaterhouseCoopers LLP, said:

"Despite the descent into technical recession, this time last year many corporate Christmas lunches had already been booked, deposits taken, and to cancel would have meant letting staff down.

"However, faced with the economic realities of this recession company bosses have now had nine months to refine policies and prepare staff for more restrained celebrations this Christmas. Many employees wishing to celebrate will do so at their own expense - and this is likely to have a direct impact on the bottom line of restaurants.

Broome added that the successful promotion of discounted offers had ensured survival for many restaurants this year, but that restaurateurs should now advertise food and drink packages that attracted non-corporate customers. Discounted offers needed to be extended to cover the festive period.

He added: "London restaurants benefitted from the weak pound this summer, driving overseas tourists to the UK, and domestic holidaymakers to the Capital for day trips. If the pound remains weak this trend may well continue to benefit London restaurants.

"However, it is unlikely to make up for the reduction in corporate spending this December. London restaurants must develop attractive offers to tempt employees as well as tourists."

Restaurant failures rising at alarming rate, say experts >>

Cost of a three-course meal rises by 6% in a year >>

Can Westfield's operators withstand the recession? >>

Hospitality insolvencies set to rise after summer lull >>

By Rosie Birkett

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