Celebrity chefs struggle to make ends meat

You know the credit crunch has really started to bite when celebrity chefs are forced to put their restaurant businesses into administration. Anthony Worrall Thompson is the latest casualty as upmarket restaurant customers cut back on their dining out…

Worrall Thompson was interviewed on television this afternoon and he was still spitting feathers at his treament by the bankers to his restaurant group (which had been put into administration during the weekend). Worrall Thompson had used his savings to buy two of his six restaurants (+one deli in Windsor) back from the administrators. But the remaining four outlets have closed.

He explained how the retained profits of his restaurants had been reinvested into the business by buying new restaurants. Some outlets had also been renovated earlier in 2008 and he had assumed that the resulting profits would be enough to cover the financing costs. A combination of falling demand and an unsupportive bank proved too tough to handle. Perhaps the growth of the business should have been managed more conservatively, but its easy to be critcal with the benefitof hindsight.

A key feature that comes out of this and other celebrity restaurant problems is the shift in demand that has occured in recent months. Put simply, customers are changing their buying patterns. They are dining out on Friday and Saturday nights, but much less so during the week. A restaurant has high fixed costs - it needs a steady stream of customers (“covers”). Few restaurants can make adequate profits from demand that is so skewed to the weekend.