Will price discounting help restaurants survive the crunch?
If eating in is the new going out, life is going to get really tough for hundreds of mid-market restaurants in the months ahead.
Hard-pressed consumers hit by a potent combination of falling property and share prices, declining real incomes, a slump in confidence and fears of huge job losses, are cutting back on non-essential items in their monthly budgets. They are eating out less or perhaps switching to lower-priced chains that – on the plate at least – seem to offer better value for money.
How can restaurants respond to the threat posed by a fall in discretionary spending?
Price gouging in Edinburgh
Jimmy Chung’s in Edinburgh occupies a prime location between Waverley Station and Prince’s Street - it appears to thrive on a fast flow through of customers eager for a quick fill of chinese food - it needs the high footfall to pay what must be a hefty rent. An obvious approach is to engage in some price gouging - serving fixed price meals at different prices according to the time of day - all prominently displayed as shown. I will use this with my introductory Economics students in a few weeks time.
read more...»Staying local
Another example of how consumers are starting to respond quite significantly to the surge in fuel costs. Experian has produced figures showing that the number of people visiting out-of-town retailers in June fell 5.8pc against the same period last year, compared with a 1.5pc fall in town centres. Average spend per head tends to be much larger for out-of-town shopping visits so the impact on like-for-like sales is going to hit retailers with a strong out-of-town presence pretty hard. But this is good news for the future of local high streets even though the chain supermarkets have been muscling in on this space with their convenience store formats. Great news too for online retailers?
“Experian said there were 282 non-food retail bankruptcies in the three months ended May, up almost 25 percent on the year and suggesting a “dramatic acceleration” in business failures.”
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