Restaurants must attract new customers to survive

Restaurants should follow the example of the pub industry and invest heavily in attracting new customers or they will risk going out of business, analyst firm Horizons warned today.

As consumers cut back on eating out due to the credit crunch "restaurants have got to work twice as hard in order to retain their market share", according to Peter Backman, managing director of Horizons.

He argued that the introduction of the smoking ban last year had forced pub operators to develop ways of attracting more customers and giving people more reasons to visits and urged restaurants to do more of the same.

With pubs developing their food offering, restaurants and pubs are moving closer together and creating an environment where there was too much capacity and not enough demand, Backman added.

"Restaurants need to 'sweat their assets' more to improve their bottom line," he said. "Trading throughout the day, improving operating efficiencies so fewer people do more work and reducing staff turnover can all help boost profitability."

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By Christopher Walton

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