Pressure continues for small businesses in leisure sector

Small businesses in the leisure sector are facing tough market conditions as consumers push for bargains wherever possible.

According to research from KPMG, pubs, restaurants, clubs and cinemas are all struggling to turn a profit this summer as consumers continue to tighten their expenditure.

In fact, 40 per cent of consumers now make choices about restaurants based on the offers and discounts they can get their hands on. Problems start to build as businesses become increasingly reliant on deals made through sites such as Groupon for trade, which, if unsustainable, could see smaller businesses collapse in the future.

Justin Zatouroff, European head of leisure at the business advisory firm, commented: “The prospects for the sector are not exactly rosy and the war for the discretionary consumer pound will continue.

“The good news is that for many UK consumers a base level of expenditure on leisure is now part of everyday life and eating out especially remains an ‘affordable treat’ for many. London continues to be a market in its own right and businesses in the capital are expected to outperform those in the rest of the country.”

He added that the lack of organic growth for the economy means that the leisure business is likely to see tough trading conditions continue, although things should remain stable and “largely unexciting in terms of the potential to implement grand visions”.

Last year, the sector was valued at around £66 billion, a drop of £4 billion since the start of the economic downturn. A further decline is expected over the course of 2012.