Austerity Warning for Foodservice

Published: 15 Jan 2012

In 2012, the foodservice and hospitality sectors are going to face the toughest down-turn conditions yet, a senior market analyst is warning. 
Peter Backman managing director at Horizons has warned that 2012 brings a fourth year of retrenchment, with consumer confidence worsening and unemployment set to rise. He foresees that 2012 is likely to be a worse trading year for eating out than 2011, despite the influx of visitors generated by the Olympic Games in London and the Diamond Jubilee. 
Backman said: "Although the number of corporate failures in the UK eating out sector has been fairly small, balance sheets have been stretched during 2011 and it will not take much to see the rate of failures rise, probably as early as the first quarter. 
"High street restaurant operators will continue offering customers discounts, meal deals and money-off vouchers to improve traffic, which will depress their profit margins, although the anticipated fall in food costs this year will help counteract the cost of discounts." 
The industry needs to continue to innovate and "reinvent itself" in order to survive and adapt to change, according to Horizons. "The businesses that don't embrace change are those that will suffer this year, but outlets that adapt to the demands of the new consumer by offering something different, focussing on good quality for a reasonable price, are those that will survive the year ready to focus on growth when consumer demand improves," concluded Backman. 
Courtesy of the Fresh Produce Journal - http://www.freshinfo.com/index.php?s=n&ss=nd&sid=54863&s_txt=&s_date=0&ms==30&ntype=nws

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