Cranfield Business Recovery, Coventry, West Midlands, UK

Food for Thought

20th November 2009 10:12

I love eating out at a good restaurant. It does not necessarily have to be expensive but I need to be able to feel that there is care in the way the food has been prepared in the kitchen and how it is presented by the front of house staff.

It has not been an easy year for the restaurant owners and even the most famous have seen failure such as Anthony Worrell-Thompson and Tom Aitken. Has it been as bad as was expected at the start of the year? Probably not, as customers have demonstrated a healthy appetite for eating out during the year encouraged by promotional offers and in many cases a greater disposable income with the drop in interest rates.

Try turning up without a reservation at a good quality restaurant most lunch times or evenings and you will be disappointed. Recession, what recession you may ask?

But what of 2010? VAT will be moving back to 17.5% on 1 January and there is speculation that if the Tory party get in at the May election it may move up to 20%. There is a strong possibility that interest rates will begin to edge up during 2010 and the Crown is not quite as willing as it was to agree extended time to pay arrangements.

It is the latter point that concerns me the most. Many in the industry have been building up significant Crown debt during the year and making arrangements to repay the liability during 2010. That facility is now coming to an end and going forward they will not only have to find the money to pay the current tax bill on time, they will need extra funds to pay the arrears. I am afraid to say that many will not be able to and will fail.

For the accountants with clients in the restaurant sector 2010 is going to be a year of vigilance. These clients are going to need help. They are going to need to understand the breakeven levels and what is making money and what is not. They may well need help in dealing with their bank and possibly raising new capital. There is an opportunity in 2010 to generate some extra fees for this additional help as well as helping to retain a valuable client.

So it is not all doom and gloom, at the beginning of this year it was expected that the restaurant sector would be badly hit, this has not happened, it has been the pubs and off licence trade that appears to have suffered more.

I fully expect that people will continue to support the establishments that offer quality and value for money and for a food lover such as me, a drive on these two fronts has got to be good news.

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