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Small restaurants suffer as diners opt for familiar chains

By Becky Paskin , 05-May-2009

Independent restaurant insolvencies rise as diners opt for ‘safer’ branded restaurant chains

The number of restaurant insolvencies has grown by 70 per cent since the beginning of last year, as diners continue to opt for familiar branded restaurants when eating out.

 

Statistics released today by PricewaterhouseCoopers revealed that 186 restaurant companies joined the insolvency register in Q1 of 2009 alone, a 30 per cent increase on Q4 of 2008 and a greater number than hotel and pub insolvencies combined.

 

Stephen Broome, director of Hospitality and Leisure at PwC, said the majority of restaurant failures were ‘smaller often one-off restaurants at the lower end of the market,’ which diners are continuing to shun in favour of more familiar brands.

 

“Diners shun the risk of experimentation in favour of the safer option branded restaurants provide and this combined with a heavy investment in promotional activity has resulted in some recent claims of positive results from branded restaurant operators,” he said.

 

The PwC figures also revealed that pub insolvencies had reduced to pre-credit crunch levels in the three months up to March 2009, providing a ray of hope to the pub industry that has seen closures reach an average of six per day.

 

“Perhaps the predicted heat wave and greater numbers of people planning a UK holiday will at last provide some growth potential for an industry where good news has been hard to find,” Broome continued.

 

The number of hotel insolvencies reached 46 in Q1 of 2009, an increase of seven on Q4 of 2008.

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