Bad news and going for the value option

In this communication-savvy world of ours, news - especially bad news - spreads fast. When Premium Bars & Restaurants (PBR) issued its profits warning last week it took only minutes for the shockwaves to hit one of its peers, AIM-listed Jamies wine bar operator Food & Drink Group (FDG).

Already the subject of considerable bid speculation, FDG's shares collapsed, slumping by nearly 50 per cent at one point before being suspended at the company's request.

FDG's predicament fulsomely backs the suggestion that being a bar operator in London isn't all sunshine and roses.

While the likes of Fuller's, Young's and Mitchells & Butlers (M&B) point to the capital as being a haven of sorts from the economic ills of the rest of the country, with its focus on high-end wine bars in the Square Mile, FDG appears to have suffered from the knock-on effect of bonus cutbacks among the City's high-flyers, as well as thousands of job losses in the financial services sector.

Which begs another question. In these uncertain economic times, at what point do operators bite the bullet and decide to go for the value option in order to maintain top-line growth? Some, notably Whitbread, M&B and Greene King, appear already to have taken this route in some branches of their businesses.

Other operators say they prefer to stick to a premium offer, suggesting that driving volume at almost any cost is counterproductive.

Charging relatively high prices for products to attract wealthier customers prepared to pay a bit more is a brave stance in a market - and an economy - where perception and sentiment reign supreme.

Striking the balance between value (aka 'cheap as chips') and premium ("How much??!!!") will test the mettle of the industry's best and brightest in the months ahead.