Restaurant operators urged to control costs

18th August 2009, 9:05am

Restaurant operators are being warned not to ease up on the tight cost controls they imposed as the recession deepened, even if they see an upturn in the run-up to Christmas.

Horizons' managing director Peter Backman explained more: "There has been much talk of green shoots in the industry, but operators should treat this as the downturn levelling off, rather than trade improving.

"Consumers are likely to remain cautious with their spending but if the economy improves we could see confidence returning and restaurant spend rising, particularly as Christmas approaches."

Horizons warns that businesses are likely to take a longer-term view of the economy, remaining restrained when it comes to corporate entertaining and staff Christmas parties.

"Restaurant operators shouldn't rely on an increase from corporate spend over the next few months, as companies will still be reluctant to spend money on entertaining, particularly if they are also making redundancies."

Backman added that operators must continue to negotiate good deals from their suppliers, put more cost-effective dishes on menus, ensure they aren't over-staffed, and that food wastage is kept to a minimum.

"While food prices are currently stable and in the short-term might even fall slightly, long-term the economic indicators are that prices will increase again. Restaurateurs face further pressure in January when VAT returns to 17.5%. This will impose an increase of 2.1% across the board of VATable items, including meals eaten out, but not most supermarket food.

"This will widen the 'value' gap between eating out and eating at home. Foodservice operators will no doubt take action, including absorbing some or all of the increase if they can," he said.

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• 07 Sep 2010 - Are restaurants wasting their time with discount vouchers?
• 30 Apr 2010 - Restaurants introduce tempting deals to boost sales
• 16 Sep 2009 - Diners are still eating out but have reduced average spend
• 20 Aug 2009 - London restaurants defy recession as openings rise 9%
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