Over 520 restaurant operators will finish 2009 in financial difficulty

10th November 2009, 1:11pm

Industry analysts Plimsoll, have assessed the top 1,000 restaurant operators in the UK and found that over half will be finishing the year in financial difficulty.

David Pattison, author of the new analysis explained more: "Having clung on through the bad times many of these struggling companies are going to run out of time and fail just before the recovery and pick up in demand really takes hold.

"Sadly, some of them are just too weak to carry on and there will be a spike of failures in the New Year. On the flipside, their demise will bring a welcome reduction in competitive pressure for those left."

However, among the gloom there have actually been some outstanding performers, Pattison says: "A number of operators have managed to improve their performance in the latest year. They are part of a band of 263 companies that prove success can still be achieved in the industry despite lower demand and rising costs.

"They also prove that bad companies fail in a recession; good companies simply do not. These companies will lead the industry out of recession with some smart acquisitions and maintaining their recent success."

Pattison is also convinced the market is due a prolonged period of consolidation with the number of companies in trouble leading to heightened takeover activity. He said: "With too many companies chasing weakened demand it is inevitable that there are likely to be a number of high profile mergers and takeovers. In all honesty it's long overdue.

"Once demand started to flag it was inevitable companies would be caught out. This period of consolidation is needed to sort out the dead wood. We have named 86 companies as the best acquisition prospects in the market."

He also reserves special mention for those reckless companies that continue to chase sales despite mounting losses: "There are a group of 180 serial loss makers still operating in the market. For the second and even third year running these companies have made a loss. Whether they are blatantly chasing sales or just trying to maintain their market share, something has to give. The recession has put prudence back at the forefront of boardroom strategy and these companies have to cut their cloth accordingly or face the consequences".

Summing up, the new 2010 edition of the Plimsoll Industry Analysis shows a buffeted market emerging from recession with a one in three operators making a loss and over half of companies in financial difficulty but as Pattison insists: "If you are going to make a success of 2010, you need to learn the lesson of 2009. There are going to be big changes in the industry with lots of takeovers, a number of high profile failures and even the odd surprise or two along the way."

The 2010 edition of the Plimsoll Industry Analysis - Restaurants individually assessing every company in the UK market is available now.

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