Whatever your view of the state of the country , consumer spending has kept the economy growing. Whether it be from modest wage growth now eroded by rising inflation, reduction in savings rates and increase in credit card debt.
However has the spending spree come to an end, and the sources of extra money finally run out?
When past recessions loomed large, early indications were the drop off in certain types of expenditure such as large capacity motorbikes, restaurants and pubs closing, and travel companies closing down.
Remarkably the last downturn saw restaurants continue to flourish, as the going out to eat habit had firmly entrenched itself in to modern life.
However very recently we at Graywoods have seen ourselves advising more and more restaurants, pubs and cafes on their precarious financial situation.
As money get tighter, people firstly look for cheaper options on the menu, especially when it comes to wine, then cut out courses, and finally stop going out altogether!
Besides the downward squeeze there is the upward pressure of increasing costs, in wages rising to meet not only the minimum wage but also pension costs. There are the increased establishment costs most notably business rates, and due to the fall in the value of the pound the cost of imported food products is increasing.
In this scenario there is only so much the squeezed restaurateur can take, they may modify the menu, scale down the drinks prices and choice and reduce staffing levels.
It seems that once a restaurant is on a downward spiral it is hard to turn round, as customers decrease, and those who do come don’t come back as it is no fun sitting in an empty restaurant with no buzz or atmosphere.
If you find yourself in this situation, give Graywoods a call we can offer various financial solutions which can help refinance and turnaround the business or if all else fails bring the business to an end.