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The recent rise in Creditors Voluntary Arrangements (CVA) as a result of the so-called ‘casual dining crunch’ is a worrying trend in the restaurant sector.
Since the start of 2018, high street operators Byron Burger, Jamie’s Italian, Prezzo and Carluccios have all embarked on CVAs with a view to closing loss-making sites and secure rent discounts. Gourmet Burger Kitchen has since followed this trend – revealing a 10.6% fall in sales last month.
So, what next for these well-known brands?
The key to a successful CVA is that there must be a viable business for the future. So, a CVA is ideal for a business that can identify what has gone wrong (for example the loss of a major customer or a bad debt) and can overcome those issues.
A CVA gives a business time to return to profitability by providing the opportunity to make affordable repayments to creditors and put in place changes to rectify existing problems while at the same time keeping existing directors in control.
The savvy chains who have been affected by this crunch now understand that brand recognition and competitive pricing are no longer the top priority for customers.
Diners today are demanding authenticity, sustainability and above all, an experience. For restaurateurs this means keeping customers’ needs at the forefront, even well before they set foot in your location or made a reservation.
Competition has never been fiercer as new restaurants continue to open, all offering new experiences to attract diners looking for quality and value.
Steven Pike comments: “The opportunity for hospitality businesses to attract a loyal base and enjoy success still exists, even in this difficult market. However, as people haven’t stopped going out – it’s about where they’re going out and why.”
Many of the brands referred to above are responding by refining their guest proposition, ensuring that it is delivered consistently, and monitoring guest feedback and online reputation to ensure the success of the strategy.”
The market still presents opportunities for those brands wanting to take control of their guest experience. To learn more about how we can help you to manage the guest experience please contact us.
