Record restaurant closures blamed on strong franc

A plastic chef attracting/scaring off customers in front of a restaurant in Lucerne Keystone

More than three times as many pubs and restaurants disappeared in Switzerland last year as the year before. The catering industry points the finger at the strong franc, responsible for more bankruptcies (+4.4%) and fewer new openings (-25%). 

Some 2,220 places to eat were removed from the trade registry and 684 went bust in 2017, according to a reportExternal link in the SonntagsZeitung based on data from the industry umbrella organisation GastroSuisseExternal link and Creditreform. With 2,048 restaurants opening, the net loss was 856. 

GastroSuisse president Casimir Platzer blamed the strong franc and deferred investments for the record number of closures. These were particularly high in cantons Ticino, Bern, Geneva, Lucerne and Zurich. 

“The strong franc is really squeezing businesses in the mountains, in the countryside and in border regions,” he said, explaining that there weren’t enough guests, and therefore turnover, in an industry with already small margins. 

Platzer said that in tough times it gets harder to find someone to take over the business. He added that fewer children were prepared to work the long hours necessary, often for lower salaries. 

The SonntagsZeitung said additional factors were changing eating habits and less time for lunch.

Italian elections trouble Swiss franc

A tumultuous political power struggle in Italy has put further pressure on the Swiss franc by weakening the euro in recent weeks. One of Europe’s largest economies has been virtually rudderless since an inconclusive general election in March.

After the franc briefly weakened to the symbolic CHF1.20 ($1.21) mark against the euro in April, the exchange rate dipped to 1.15 due to the inability of Italian political parties to agree on the composition of a government.

The deadlock worsened with the collapse of the Eurosceptic coalition of the Five Star Party and the Liga party. This happened after Italy’s President, Sergio Mattarella, blocked the appointment of a cabinet member to the proposed new government.

The former executive director of the International Monetary Fund, Carlo Cottarelli, is now being tipped to head an interim government as prime minister. Mattarella, who is facing fierce criticism for his role in the debacle, still has the option of calling fresh elections.

The political deadlock in one of Europe’s largest economies has weighed down the value of the euro. The single currency rallied slightly after the collapse of the proposed coalition, which at one stage had threatened a referendum on whether Italy should stay in the euro.

But foreign exchange markets expect further volatility as Italy seeks to find a stable government. That in turn could strengthen the franc further against the euro, to the detriment of Swiss exporters and the domestic tourism industry.