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Testing times for restaurateurs

PUBLISHED: 06:00 10 March 2010 | UPDATED: 08:42 02 July 2010

Roger Hickman's restaurant on Upper St Giles. Photo: Denise Bradley

Roger Hickman's restaurant on Upper St Giles. Photo: Denise Bradley

Sam Williams

With fewer people eating out and diners counting their pennies, today is a challenging time for restaurateurs. But offering value for money could be the key to success.

Kenny Russell, who runs seven McDonald's restaurants in Norfolk. Photo: Angela Sharpe

With fewer people eating out and diners counting their pennies, today is a challenging time for restaurateurs.

But offering value for money could be the key to success. SAM WILLIAMS reports.

Hundreds of millions of meals are eaten out of the home in the UK each year, and the restaurant, cafe and pub food market is worth tens of billions of pounds annually.

Sarah-Jayne and Nigel Raffles at St Benedict's restaurant. Photo: Denise Bradley

But there is a worrying trend for restaurateurs - fewer people are choosing to dine out.

While one in every nine meals consumed last year was eaten out, that proportion is down from one in eight in 2008, as money conscious shoppers have looked to save money in the recession, according to Eating Out in the UK 2009, a report by the Allegra Food Strategy Forum.

And research by business support group Business Link shows a similar trend.

A Restaurant Barometer survey in September 2009 found more than half (53pc) of restaurants had seen a fall in takings compared with the same month of 2008. Just 26pc reported an increase.

Alistair Wilson (left) and James Robinson in the Wine Cellar. Photo: Bill Smith

A similar trend was seen in the number of customers, with 49pc reporting fewer covers and just 27pc seeing a rise.

But while the recession has impacted on Norwich restaurants, a focus on value for money has helped buoy up sales at others.

Hunger for cheaper meals led to a record year at McDonald's fast food restaurants both nationally and across Norfolk.

Kenny Russell, owner of Bradecca Restaurants, which holds the franchises for seven McDonald's in the county, said he had seen a 12pc increase in sales in 2009, with monthly sales records broken several times.

The company, which runs branches in Hay Hill, Chapelfield, Boundary Road and the nearby Asda, as well as Longwater, Wroxham and Swaffham, saw turnover hit about £10.5m in 2009, up £1m from 2008.

Speaking earlier this year, Mr Russell said: “Generally in a recession McDonald's has done well. People appreciate that we give a good product at a good value price and they have been voting with their feet.”

And it is not just fast food outlets that have grown in the recession.

A focus on value for money has also helped some city restaurants defy the gloom with increasing sales.

Restaurateur Nigel Raffles, who runs four city eateries with his wife Jayne, said while the recession had initially come as a blow to his businesses, sales had increased following renewed marketing efforts.

The couple run The Library on Guildhall Hill, Pinocchio's and St Benedict's restaurants on St Benedict's Street and Pulse vegetarian café in Labour In Vain Yard, off Guildhall Hill.

Mr Raffles said the downturn had been “a wake up call”, adding: “It makes you look at your business very hard and run it to ensure it remains fit and healthy and delivers good quality products.

“Marketing really comes to the fore, and also adapting your business to the current market. People are always going to go out to eat, but as a restaurateur you have to give extra value, make sure you are pricing your food competitively and providing customer care.

“You have to endeavour to exceed people's expectations and deliver excellence. It's very difficult to do that all the time but you have to aspire to that level.

“There are fewer people going out to eat so you have to do more to get them.”

Despite the challenges, Mr Raffles said the downturn had been “a positive experience” for the business, with sales growing last year and this, with the steepest growth at St Benedict's and The Library.

Part of the couple's response to the recession has been to introduce new offers, for example two courses and a small glass of wine for £10 at lunch or for early evening diners, and set prices for three course meals.

He added: “If you price it as a three course meal people know exactly what they are going to spend. This sort of thing is very important and is one of the reasons we have seen strong growth.

“The recession has been good to us, but we have had to work very hard to make it happen. It doesn't just happen by itself.”

The recession has seen a number of Norwich restaurants close, including the Blind Pig, on Farmers Avenue, which was open only a few months, and E18hteen bar and restaurant on Bedford Street.

Others, such as Tootsies on Chapelfield Plain, now Giraffe, changed hands after the parent company went into administration.

But the economic conditions have not stopped new restaurants springing up.

James Robinson and business partner Alistair Wilson set up the Wine Cellar in Woburn Court, off Guildhall Hill, on May 1 2009, after the former restaurant, the Wine Press, closed.

Aimed at offering affordable fine dining and wine, Mr Robinson said the business had performed well, but said the business partners had worked especially hard to get things right first time.

He said: “We were more conscious of our offering and really thought about what people want and what Norwich was missing.

“We looked at the margins, and although we have to make a profit we can pass a lot of that on to the customer to make sure people come back.

“We considered everything that someone who has been in a restaurant for 20 years might have overlooked.

“We worked really hard getting the right food and the right proposition. And we have built up organically from there.”

He said the restaurant had broad appeal across the age ranges, and rather than charging people as much as they can get away with, instead focused on persuading people to come more frequently by offering consistent quality and prices.

“We are trying to coax people back more often rather than trying to get as much money as possible off them when they come.

“That is our basic model, and it is working. We see people coming in here three times a week.”

The Eating Out 2009 report found the recession had left a long-term legacy among diners, who will continue to demand good food and a better dining experience, but are not prepared to pay for it, which the authors said would continue even when the economy improves.

And that view is shared by Mr Robinson.

“The recession has jolted people back to reality,” he said. “Times are tough and you need to count your pennies, and if you go out to eat you look at those aspects.

“I'm not sure the old gung-ho attitude, going out where you want no matter how much it costs, will come back. And that's not a bad thing.”

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