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Preventing the Credit Crunch from Biting
Despite the credit crunch, today's consumer interest in eating out has undeniably helped to fuel a sustained period of resilience in the restaurant trade, in which good sites with the right customer offering can expect to do very well indeed.
Kenneth Topping outlines what it takes to make it in a competitive marketplace…
From Fife to the Borders and the travel-to-work areas around Scotland's biggest cities, the growth of first class restaurants in commuter towns is indicative of the current demand for affordable quality dining.
Typically, these enterprises place a strong emphasis on the provenance of the produce used, which again taps into growing customer insistence on quality ingredients such as Scotch Beef Club meat, West Highland seafood and organic vegetables.
The entrepreneurs involved are often seeking a 'lifestyle' business in an area which offers a pace of life that is very different to the city's, but on a site with the potential to do well as a 'destination venue' for people driving out of town in search of something special.
In the cities, meanwhile, we're seeing an explosion of ethnic and fusion concept restaurants, from Polish and Japanese to Thai and Turkish, and exciting new ventures based around the finest quality Scottish cuisine.
Former banks and churches have evolved into stylish and profitable licensed premises with quality offerings and discerning clientele; a notable example is the popular Cento Tre on Edinburgh's George Street.
However, licensed restaurants are not necessarily an easy option, and apart from the work involved in building up an identity and a favourable reputation, there are several other important considerations to bear in mind for anyone embarking on a new venture. These include:
- Can the restaurant sustain broad interest in its core market? A restaurant which might trade well in a city could be just a little too specialised to exert broad appeal in an out-of-town location.
- Can the operator source reliable catering staff, particularly in semi-rural areas?
- Are loan-to-value parameters acceptable; is there scope to develop the business and expand or revise the existing operation?
- Could applying for a licence under the new Licensing Act conditions present any unforeseen problems?
So, despite the credit crunch and perceived fears of a recession, there are areas of the hospitality industry in Scotland which are so far proving, for the most part at least, resilient to the downturn.
Indeed, now could be the time to take advantage of a bargain business before turning it around and taking it to the next stage of its development. With solid professional advice on where the establishment is and where it could be going, there's every chance your new venture will be a success.
This article has been edited from its original version. For the complete feature, please see Catering in Scotland magazine August/September 2008.
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