At restaurant Vanderveen, employees are said goodbye during ‘a last supper’. The restaurant received a Michelin star, but had to close its doors a month later. Image Joris van Gennip
The number of bankruptcies increased by 9 percent in September compared to August. The figures from Statistics Netherlands (CBS) presented on Thursday illustrate a trend. In the first three quarters of 2023, 60 percent more companies were declared bankrupt than in the same period last year. “And those bankruptcies are just the tip of the iceberg,” says Joris Knoben, professor at the Tilburg School of Economics and Management.
Knoben calls the number of bankruptcies the thermometer for the state of the business community. ‘Despite the corona crisis and inflation after the outbreak of the war in Ukraine, the number of bankruptcies remained low, we have now reached a tipping point. This includes a much larger group of entrepreneurs who voluntarily stop. These are signs of a cooling economy.’
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Robèrt Misset is an economics reporter for de Volkskrant and writes mainly about retail and catering. He was previously a sports reporter for more than thirty years.
Although slightly fewer entrepreneurs went bankrupt in retail in September, the FNV union sees the consequences on the shopping street. Chains such as Big Bazar and BCC have recently succumbed. Linda Vermeulen, trade union leader FNV Handel, advocates a transition payment for employees who lose their jobs due to bankruptcy. ‘Think of it as a loyalty bonus for people who kept the stores running in difficult times.’
Moreover, according to the FNV, the notice period for employees should expire if companies have been declared bankrupt. ‘Now people still work at the bankrupt Big Bazar, while they can get a different and better-paid job.’
Not a complete picture
The number of bankruptcies has actually increased in the catering industry. But the CBS figures do not provide a complete picture, says Marijke Vuik, chairman of Koninklijke Horeca Nederland. ‘You don’t see the owners who stop voluntarily, they are much larger numbers than before the corona crisis. In addition, 20 percent more catering businesses are for sale than before the pandemic, a worrying development.’
The catering industry is in a split. Although turnover will reach a record high of 22 billion euros this year, partly due to higher prices, the margins are wafer-thin. “The turnover is even higher than before the corona crisis, consumers know where to find us again,” says Vuik. ‘The problem is that margins are under pressure due to inflation. You see the full pub, the well-stocked restaurant. But they conceal the fact that the need is often great.’
Vuik points to the accumulation of higher prices for the catering industry, from energy to rent, purchasing costs and wage increases. Previous figures from Statistics Netherlands already illustrated that the added value of the catering industry is even below the 2016 level, says Vuik. ‘Two out of three catering companies do not pass on all costs to the consumer.’
Professor Knoben sees an economy ‘that regulates itself’. He notes that ‘many companies that were not viable have been kept afloat by the corona support’. According to Knoben, it is one of the reasons why the number of bankruptcies has remained relatively low. ‘Companies that achieve narrow margins despite high turnover have a structural problem. Should you continue to help them? There is probably too much catering, especially in the larger cities.’
Bankruptcy wave
Credit insurers are already predicting a ‘bankruptcy wave’, now that 43 thousand entrepreneurs have not responded to reminders from the tax authorities to pay off their overdue tax debt. On behalf of KHN, Vuik asks for more time for the group of entrepreneurs who have not yet started making repayments.
However, the catering industry no longer has to count on leniency, says Knoben. ‘That is now coming to an end. Entrepreneurs who buried their heads in the sand or hoped that a settlement would be reached are now hitting a wall. Moreover, the bottom of the government’s treasury is in sight, the time for compensation is behind us.’
Bankruptcies are no reason to panic, says Knoben. ‘They are part of a healthy economy.’ He points to 2013, when no fewer than 911 companies were declared bankrupt after the economic crisis. ‘Partly due to the corona crisis, some sectors have been on pause, and the economy is now being lifted. The growth has stopped for a while. But when companies collapse, there is space in the labor market that can be used by others. It is the way the economy renews itself.’
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2023-10-12 15:39:03
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