Restaurants make staff cuts and renegotiate contracts to save cash

More than two thirds of major restaurant companies cut back on staff and froze the salaries of those who remained employed last year to help them survive the recession, a survey of British Hospitality Association​ (BHA) members has shown.

The survey, conducted by accountancy firm BDO Stoy Hayward, looked at ways firms had cut costs in the last year and asked them how they intended to operate during the next one.

Eighty-eight per cent of companies said they had renegotiated food and beverage contracts to save money while the same number said they had introduced special offers and promotions to bring in more customers. Three quarters said they had concentrated on training their staff better.

Asked about their predictions for the next year, one-third of businesses believe there will be slight growth in both 2009 and 2010 while a similar number believes there will be strong growth in 2010.

Although more than one-third of restaurant operators believe they will need additional funding in the next 12 months and half will need more in 2010/11, the majority believe that its poor availability will be a big obstacle to their plans for growth. A downturn in consumer spending, the availability of suitable sites, high food prices and the burden of regulation, such as changes to the tips law, tightening of immigration laws and the working time directive were also cited as the major inhibitors to future growth.

The companies surveyed are all major restaurant groups operating in the UK, consisting of 24 brands with over 1,200 units employing 30,000 employees and with an aggregate turnover of over £1bn.

BHA chief executive Bob Cotton said that this was the first survey the association had undertaken in this area. "We intend to build on it and produce it annually, so that it becomes a key indicator of the health of the restaurant sector," he said.