Tightening the belt

Matthew Pace, Chairman of the Action Group Restaurants Section at the Malta Hotels and Restaurants Association says that despite the worsening economic situation throughout Europe, Maltese diners have not really been affected so far.

"In fact, over 2011 we have not seen a decline in the number of local diners at all, but  there is a tendency for local diners to be more conservative on price when making their choices," he said.

In a saturated market, where MHRA registered dining establishments exceeds 1,800, a number of factors have influenced the performance of certain restaurants and given others an edge over competitors - including type of restaurant, location and creativity of their product.

Restaurants in areas that are frequented by tourists have had a better year than those frequented mostly by locals. 

Pace says that "restaurants which are situated in more tourist concentrated areas have recorded marginal growth, while operators located in domestic tourist areas have had same customer frequency as last year, though with a decrease in average customer spend".

Value for money remains high on the agenda of diners with budget restaurants that are doing well, while higher-end restaurants struggled to keep sales on a par with last year.

"MHRA refers to 'budget restaurants' as those which have recorded equal sales as last year, while the higher end ones have had to strive harder to match last year's figures," he said.

Pace emphasised that success lies in the restaurateur's ability to tailor make their product to match customers' needs, as well as flexibility to change their product according to evolving trends.

"The successful restaurants are those that manage to establish what their target customer specifically requires: use of correct marketing strategies, and, most importantly, providing value for money to their clientele. In addition for it to be a successful, one must utilise the human resources efficiently. There is no room for high overheads."

The MHRA has identified a definite trend towards healthier eating habits among both local and foreign diners. "More salads are being sought, and water and low calorie drinks are replacing the traditional sugar-added soft drink. This of course is a very positive trend, and the trade is adjusting to this new requirement.

"Maltese diners are joining discount schemes, which we hope will generate more revenue, but this may also have an impact on the profitability of the operators unless it is compensated by increased turnover."

Chef-owner of Giannini's restaurant in Valletta, Aaron De Giorgio, said that 2011 has been an uphill struggle, but despite everything, business in 2011 has been better than last year.

"My partner, Ruth, and I took over the restaurant again in mid-2010. It was not looked after by the previous tenants so we have had a bit of an uphill struggle to re-build our clientele once again.

"While believing that concerns over the economic situation in Europe has affected diners, good food is something everyone likes and still needs. Our major concern this year has not really been the worsening economic situation, but the effect the Valletta reform has had on our business.

"The demolition of City Gate and subsequent re-routing of traffic, lack of parking and lack of adequate signage and tourist information, has had a negative impact on business.

"Despite all this, I believe that an excellent team, that consists of Ruth, myself and with other staff members along with the highest quality food and service has contributed to the increased number of diners we have had over 2011 and will continue into next year."

David Darmanin, chef-owner of 'Taverna Sugu' in Vittoriosa, agrees with Pace, explaining that though people are still going out to eat, their average spend has fallen.

"We only opened last year so we were expecting an increase in customers for 2011, and while this materialised, we noticed that spending per capita has seriously plummeted.

"High-profile clients, especially ones on business accounts, will very rarely purchase expensive cellar wines unless it's a special family occasion or a celebration. My guess is that the recent economic crisis has brought in the idea that 'bling' is no longer fashionable. As much as you rarely see gold watches on men anymore, you will hardly get a company executive spending €100 on a bottle of wine while hosting a business dinner, as it could actually look as inappropriate nowadays.

"There is also the fact that many SMEs are not doing as well as they envisaged, and as a result, their owners and directors are no longer dining out as often on business or for leisure.

"From a personal point of view, our performance for 2011 was seriously hindered by the restoration of 'Couvre Porte' which practically blocked access to my restaurant. Business owners were informed just days before the works began and completion was delayed by several months. After much insistence from business owners, works were finished - and that is now water under the bridge."

Darmanin also agreed that success is dependent on creativity and the ability to find a niche in the market and cater to that.

"My restaurant depends on a market that is up for something different - a small tavern with the offer of degustation menus (as opposed to a-la-carte) featuring a selection of fresh, local, traditional and seasonal fare. As fancy as that may sound, I have discovered that the mass market in Malta - as opposed to the changing trends in mainland Europe - is still very much attached to the pizza-pasta or Chinese restaurant scene, where never-ending menus are proportional to the perception of quality and quantity on the plate, irrespective of whether ingredients come out of a can or a freezer... so ultimately, my product is directed at a niche of a few hundred customers who keep returning and spread a good word."