Restaurant sector hit hardest by UK recession

UK restaurants have been hit harder by the recession than the other parts of the hospitality sector, accounting for 45% of the industry insolvencies in the quarter before Christmas, research revealed today.
 
The study, by consultancy PricewaterhouseCoopers (PwC), showed that 141 restaurants went to the wall in the final quarter of 2008. In total, 363 restaurants suffered insolvency in 2008 - a 32% rise on the year before.

Restaurants have been battling both with the reduction of corporate entertaining and consumer disposable income squeeze as well as innovative food retailer offerings and a culture of cooking programmes that encourage aspirational cheffing, according to PwC.

In a recent PwC poll, asking consumers what would be first choice if they were forced to cut spending, take-aways, fast food (14%) and eating out (11%) were top of the chopping list. While only half of these respondees would reduce their grocery purchases.

Stephen Broome, hospitality & leisure director at PwC, said: “In addition to a number of expected high-end restaurant failures, those mid-range restaurants that do not focus on either a value for money or a unique dining experience have been disappearing from our streets since last summer. This trend is likely to accelerate.”

Last year was also a tough one for the pub industry, proving to be even worse than 2007 with 64% more pub businesses becoming insolvent, the PwC report revealed.

Broome said: "The pub industry has been ravaged by a combination of negative factors over recent years, and the recession is likely to put further pressure on an already difficult trading environment. We expect our recent prediction of 4,000 pub closures by 2010 to sadly remain on course.”

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By Daniel Thomas

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