Restaurants must follow pubs to survive

A market analyst has urged the restaurant sector to follow the example set by pubs if they are to avoid the credit crunch.

Peter Backman of Horizons believes the smoking ban gave pubs a wake up call and has led to many fresh new innovations, a heavy investment in marketing and a quality food offering.

Backman cited Geronimo's Red Barn in Lingfield, Surrey as an example of the diversification with its farm shop and Aga cooked breakfasts and coffees.

"Now consumers are feeling the crunch they are cutting back on discretionary spend - including eating out," he said.

"When they do eat out they will be looking for value-for-money, reliable service, good quality food and something that offers them what they want, when they want it.

"Competition in the high street has never been more aggressive, restaurants have got to work twice as hard in order to retain their market share.

"Restaurants need to 'sweat their assets' more to improve their bottom line. Trading throughout the day, improving operating efficiencies so fewer people do more work and reducing staff turnover can all help boost profitability."

"Pubs and restaurants are moving much more closely together creating a market where there is too much capacity and not enough demand.

"Many pub operators are managing to keep their offer fresh with new ideas and innovative marketing techniques. If restaurant operators don't do the same they will lose their market share - some could go out of business."