In Toulouse, for restaurants, it’s the end of life on credit
Professionals who have to deal with inflation, skyrocketing energy costs and rising salaries have the greatest difficulty repaying their loans.
What does it cost? If the government’s doctrine has made it possible to keep the economy afloat at the end of the health crisis, for hoteliers and restaurateurs, the hour of the bill has come. And the bill turns out to be far too high. The reimbursement of the loan guaranteed by the State (PGE), paid for free then recovered by the banks at rates now rising, acts like loan poison, which worries many professionals in Toulouse.
“We are in a terrible gear, explains Thomas Fantini, vice-president of Medef Haute-Garonne in charge of hotels, catering and events. With inflation, rising food prices, exploding energy costs, labor shortages, combined with declining activity, some of us have increasingly more difficult to assume the reimbursement of the PGE”. And on arrival it’s a dead end. “Imagine a patron who has borrowed up to 25% of a turnover of 1 million euros, he must repay 250,000 euros over four years with a maximum rate of return of 5%. In the current context, it no longer works, ”assures Thomas Fantini.
For the moment, it is the suppliers who toast
A few days ago, the Union of Hotel Trades and Industries (Umih) published a survey showing that one in four companies concerned would not be able to honor their treaties. “It’s a huge problem, we explain to the union and it is not because in the tourist regions we have worked correctly for three months that we can reimburse 25% of the turnover in four years. “. Far from the beaches, Toulouse restaurateurs have even fewer solutions. “I have been sounding the alarm about the plunge in our rates of return for months,” warns Thomas Fantini. By darkening the picture a little too much? If we stick strictly to the statistics, the commercial court of Toulouse has not yet recorded massive business failures. This year, the consular court delayed 73 insolvency proceedings… compared to 89 in 2019 before the Covid crisis. “There is nothing paradoxical about this, notes Thomas Fantini, the cost of loans does not appear on the line of a company’s current results. You can have a positive balance sheet and a negative cash flow. We are in this situation. It is the cash that is lacking and for the moment it is the suppliers of the bars and restaurants who are toasting”. At Medef, we do not hide the concern of the sector with, as a bonus, the specter of a decline announced at the end of the year.
“There is going to be a lot of damage and even those who make it through are in danger. Because if they don’t have the capacity to invest, eventually they will be dead”… The prediction is grim. And the call from professional organizations to spread reimbursements over ten years (as is already the case for companies in) in order to save those who can still be saved, will not be enough.