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Hospitality insolvencies continue downward trend

27 | 11 | 12

The number of businesses going out of business in the hospitality industry decreased over the course of October 2012 on a year-on-year basis, possibly indicating that restaurants, bars and hotels are continuing to perform relatively well despite the difficult economic conditions facing companies and consumers across the UK.

According to global information services company Experian's latest BusinessIQ Insolvency Index, the number of insolvencies suffered dropped by 22 per cent over this period.

The overall fall in the number of insolvencies among UK businesses was only 8.7 per cent, indicating that a sharper improvement was seen among restaurants, hotels and bars.

Stability for firms was underlined by the fact that only 0.12 per cent of the business population failed in October 2012, with the greatest improvement seen in mid-sized companies with between 100 and 500 employees.

However, Experian managing director Max Firth warned that this does not mean these kind hospitality operations can become complacent about the strength of their position.

"It shows that insolvencies are indeed stabilising, but the increase during October in large business failures highlights the need for ongoing monitoring of all clients and suppliers, regardless of size," he explained.

Mr Firth went on to warn that companies should remain "prudent in order to prosper", with many businesses showing signs of impressive stability but the market still  essentially somewhat volatile given the uncertain business climate in Britain.

While firms with kitchen equipment should certainly heed this advice, it should be reassuring for many restaurant operators that the industry appears to be performing better than many other UK businesses.

Nevertheless, many of them will be looking for a way to get an edge on their rivals in the sector in the new year, as the hospitality trade in Britain continues to be highly competitive.

Research and analysis firm Lost in Catering has highlighted how affordability that could be a major part of the way hospitality develops in 2013, as pressure on wallets continues to make them more wary of spending a great deal on food or drink.

According to the firm, the concept of value for money is being redefined - people are willing to pay large amounts for a meal but are focused on making sure the ingredients are well-sourced and that the food prepared is relatively healthy.

"The thought process behind menu description is beginning to reflect what caterers want people to infer from certain menu items; what gives people meaning ... or psychological security in these economically turbulent times," Lost in Catering explained.

Put more simply, this means restaurants and hospitality businesses should focus on providing quality fare rather than attempting to cut corners in order to reduce their operating costs or overheads.

Given the recent success of mid-priced dining chains, especially those operated by celebrity chefs like Gordon Ramsey and Jamie Oliver, it seems clear that UK consumers are willing to put their hands in their pocket if they are confident the food they get will be worth it.

Building up that confidence will be key to hospitality success in the coming years.ADNFCR-16001031-ID-801495482-ADNFCR


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