If we keep spending, that recession cloud may just vanish
IT’S good news week, as Hedgehoppers Anonymous sang in 1965, and a slew of surveys and official economic data have been telling us over the past five days.
Homebuyers are still applying for mortgages, shoppers are still spending on their credit cards and businesses are still borrowing to invest. Unemployment is down. Consumer confidence rose last month. Stock markets are up since the referendum.
Today’s second estimate of GDP confirmed that the UK economy grew at 0.6% in the three months to June and 2.2% for the year.
The fact there was no downward revision is positive as is the news that household spending was up by 0.9%. Contrary to the doomsters, we went into the referendum in confident mood. Little has
Nick Goodway
changed economically since June 24 — yet. We still have that innate British ability to talk ourselves into recession.
We equally have the ability, as consumers and infrastructure builders, to spend our way out of trouble. The recession that seemed inevitable two months ago now looks much less likely to happen. BERNI Inn, Golden Egg, Casey Jones Burger Bar, Wimpy, Aberdeen Steakhouse and Garfunkel’s were the restaurant and fast-food outlets of my youth.
Today they have disappeared completely from our High Streets or are shadows of their former selves. Eating out is one of the most fickle industries. Food fads, taste changes, health consciousness and, straightforwardly, the place to be seen or not seen can all dictate the success or failure of a brand. One year Nick’s Place is in, next year it’s out.
With an encapsulating name like The Restaurant Group you might think the company had its finger on the pulse of the nation’s taste buds. Sadly not. The ousting of chief executive Danny Breithaupt two weeks ago and the update today show just how badly TRG has gone off the rails.
In particular, biggest brand Frankie & Benny’s started to look expensive against value-busting rivals, lost some of its appeal to families and even made the fatal error of taking favourite items off the menu.
While new brands like Coast to Coast have got off to a reasonable start, they weren’t enough when TRG’s older brands like Chiquito and Garfunkel’s (yes, that one) were slipping off the radar. At the same time, today’s decision to close 33 sites suggests recent management has not been too good at choosing locations.
One-off costs of £59 million are pretty nasty and Andy McCue, ex-Paddy Power, has a great deal more to do when he arrives as chief executive next month. Can he afford to maintain the dividend?