GBK and Tootsies feel the pinch as diners tighten their belts

Reports from the world of finance this week show that restaurant chain Clapham House (who own Gourmet Burger Kitchen and Tootsies amongst others) are feeling the pinch.

Even in an area like Chiswick which is considered prosperous, few businesses are more exposed to a decline in consumer spending than the restaurant business. And it doesn’t matter how good the restaurant is - if money is tight eating out is one of the first things to be sacrificed.

Which is supposedly what has happened at Clapham House who warned of tough times ahead with falling sales acerbated by rising food costs and rents.

However, the High Road’s burger supply appears safe for a while as Clapham House plans to scale back new openings to offset the decline rather than closing existing restaurants.

Chairman David Page told www.moneyweek.com, “Despite the uncertain economic outlook, we remain positive about the medium-term demand trends for the UK eating out market.”

According to the financial news website, none of this should be a huge surprise. “The truth is, life isn’t going to get any easier for these chains any time soon. The discomfort has only just begun. Rather than curtailed expansion, we could soon be hearing about closures. You have to wonder just how hard companies like Clapham House will find it when their competing chains start to cannibalise each other for business.” writes Money Week’s John Stepek.

“It’s just an anecdotal observation, but anytime I’ve seen a Gourmet Burger Kitchen, there’s Tootsies somewhere near by. On Chiswick High Road in west London for example, the two chains are across the road from one another.

“Now two fancy burger restaurants might be more than sustainable in the middle of an affluent area like Chiswick during the good times. But when people start tightening the purse strings, owning two restaurants serving practically the same thing on the same road just looks like profligacy.”

December 5, 2007