Victim of the chain gang

Pierre Victoire had the recipe for success, but lacked the stomach for big business. Richard Ehrlich on the restaurant that grew and grew until it burst

THE LOCATIONS may not have been the smartest and the furniture was second hand, but with menus that changed daily, served by trendy young students, Pierre Victoire succeeded in creating a cosy French bistro feel - and all at pounds 5.90 for a three-course meal. Founded in the recession of the late Eighties, the restaurant chain seemed to have the world at its humbly shod feet.

The empire eventually expanded to over 110 outlets. However, last week the Edinburgh-based company announced that it was calling in the receivers. The chain that once looked set to become the McDonalds of French food is going belly-up.

Pierre Victoire, unlike the burger group, was not a chain of centrally managed restaurants. Founded by Pierre Levicky, a Frenchman, around 80 per cent of its branches were franchises, the first of which opened in Edinburgh. Would-be patrons had to stump up an initial fee of pounds 17,500+VAT and hand over 5 per cent of net turnover. "Typical total investment (excluding working capital)," according to their franchise offering, was pounds 60-90,000. For this, prospective franchisees were tempted with a typical projected turnover in the first year of pounds 450,000, rising to pounds 650,000 in year three. It all sounded pretty rosy to over 80 individuals who took on franchises. But whereas the McDonalds franchise system ensures consistency, Pierre Victoire couldn't. "Franchisees are put through their paces in a comprehensive training programme," they said on their website home page, "and the restaurant's progress closely monitored by the Operations Support Team." Despite those efforts, it was possible to get decent food at one branch and deplorable food at another. Inconsistency of this kind undermines the value of a restaurant "brand". Pizza Express, the greatest success story in low-price restaurants, offers pretty reliable standards at all its branches. So does Cafe Rouge, even if the standard is not very inspiring. But PV couldn't manage to do it. And its practice of finding cheap sites didn't always work out: sometimes, sites are cheap because they're retailing graveyards. This was certainly true of the one nearest my home in London. The branch went bust some months ago.

However, the chain was something of a one-off, and hasty expansion probably played a large part in its problems. The industry as a whole is still thriving, with new openings almost weekly. On many nights it is impossible to get a table at London's smartest restaurants, and at some (eg, The Square, The Ivy and Aubergine) you can't even think about dinner for weeks or even months. Pizza Express goes from strength to strength, and will astonish everyone if it fails to weather the next economic downturn.

This downturn is not upon us at the moment, but now that the stock market is starting to show signs of a serious wobble, the restaurants may be heading into choppier waters. When people stop feeling affluent, one early cut in discretionary spending is the regular midweek restaurant meal. Rather than pay pounds 30 or pounds 40 a head once, twice or three times a week, they will go out once a week or fortnight - and spend less when they do.

Anyone who survived the recession of the early 1990s learned a great deal about cost-cutting, and they continue to be watchful even in the present boom. Paul Henderson, of the country-house hotel and restaurant Gidleigh Park in Devon, says that, when their trade dropped around 25 per cent in 1990, they survived by taking "a serious look at all our costs. We bought flowers direct from Covent Garden rather than locally. We paid all our bills by BACS [bank automated clearing system] rather than cheque. With small items like these we saved pounds 40,000 a year, and this helped us remain profitable over the next five years."

A similar experience is reported by general manager Andrew Russell, of Gravetye Manor in East Sussex, where the recession saw irregular trade drop off and the regulars spending less. They too cut costs: "We looked at every paper clip. We saved money on paper and lighting and heating." And they introduced less expensive wines, from the New World and Italy, for instance, alongside their mainstay clarets. And some restaurants barely felt the pinch of the last recession at all. Simon Hopkinson, founding chef of London's Bibendum and now the Independent's award-winning cookery writer, says that his restaurant "did suffer a bit but not as much as many. We had quiet Monday lunches but the rest of the week was mostly normal." He believes that the good, small restaurants "will always be all right because they're good and small. The excellent restaurants will always be all right. It's the middle-of-the-road restaurants, with average prices, but not all that brilliant, that will have trouble."

It's possible that in one respect the Pierre Victoire collapse portends difficulties elsewhere in the industry. The current boom has made it difficult for restaurants to find and keep first-rate staff. Tales are legion of expensive restaurants with semi- detached, incompetent waiters, and with kitchens and bars that can't keep up on busy nights. When people are more careful with their money, they will be less forgiving of serious shortcomings. And the casualties might include some famous names.

"We are currently looking to recruit Franchisees throughout the UK, N. Ireland and Eire," says the Pierre Victoire website, "so what are you waiting for?" In the case of the company, the answer is that they're waiting for the receivers. No one wants to know who's next to get that call.