Making excuses

Stuff reports:

Celebrity chef Jamie Oliver is shutting six of his 42 Jamie’s Italian restaurants in Britain amid tough trading conditions and a lower pound following Britain’s vote to leave the European Union.

The Jamie Oliver Restaurant Group said Friday that five restaurants in England and one in Scotland would close in the first quarter of 2017.

Chief executive Simon Blagden said “this is a tough market and, post-Brexit, the pressures and unknowns have made it even harder”.

The company has been stung by the slide in the pound, which has increased the cost of buying ingredients from Italy.

100 Euros costed around 80 Sterling before Brexit vote and is now around 85 Sterling. So around a 6% increase in food costs.

I would be very surprised if this is the real reason for the restaurants closing. The major costs of restaurants tends to be staff and overheads – not food costs. I suspect the real reason is not enough people were eating at them.

Despite the pressure on prices triggered by the pound’s fall, Britain’s economy has outperformed many economists’ expectations since the June vote.

The Bank of England’s chief economist, Andy Haldane, conceded Thursday that forecasters got it wrong when they predicted a sharp economic downturn in the event of a vote to leave.

Before the referendum, many forecasters said a vote to leave the EU could cause the pound to fall by as much as 20 percent and push the economy back into recession.

The pound did plummet, but unemployment remains low and other economic indicators such as service-sector growth remain strong.

The pound has actually increased in value since October.