Three to four restaurants and bars could be forced to close their doors for business for the last time over the next year due to the recession.That is the stark reality facing many businesses according to Philip Barnett, acting chairman of the restaurant and nightclub division of the Bermuda Chamber of Commerce, who said that his industry as a whole had been suffering from the economic downturn over the past two years and only the top businesses would survive going into 2012.Greg’s Steakhouse became the first casualty, shutting down last October as a result of the slowdown in business, while others have closed for renovations including Fresco’s, which has shut its restaurant through next month, although the wine bar is still open for business.Meanwhile suppliers have been trying their best to accommodate restaurants struggling to pay their bills as some accounts remain outstanding past 60, 90 and even 120 days - the worst record in recent memory.Mr Barnett said that the recession started to bite in November and December 2008, with a massive drop in trade the following year and 2010 was not much better.“Quite frankly the outlook for most individuals is for 2011 to still be incredibly difficult,” he said.“I think we will unfortunately see, particularly in the next few months, more restaurant closures.“Obviously Greg’s Steakhouse was the first unfortunately and being in this business for as long as we all have we just know that they are going to continue closing because there is too much supply and not enough demand.”Mr Barnett said he would not be surprised to see “three or four” restaurant and bar closures in the next 12 months and the companies taking over other existing properties sooner rather than later during the off season.“I think what has to be recognised is that as much as it may have affected Bermuda much more significantly than other jurisdictions, it is still a natural business cycle,” he said.“Hopefully the ones that are left by the end of this should be in a relatively good position as long as we continue along this path of recovery to 2012 where beyond that things will have to eventually improve.“The suppliers will simply shrink thus allowing for more business for the existing businesses to survive.”He said that the community needed to be aware of the challenges facing the restaurant trade and that those businesses which survived would be those which had a great product, management and staff and offered the best value for money through being creative.Mr Barnett said that restaurants would still need to meet the high levels of expectation from international business while balancing the expenses of operating in a high cost jurisdiction and the seasonal nature of the industry and the issues to maintaining their employees and premises.Richard Hartley, managing director of Burrows Lightbourn, said that many restaurants were having a tough time, adding that it wasn’t in his company’s interest if they were forced to close down.“Certainly the figures that we have got suggest that most restaurants are having a tough time and people are spending less money, but the big thing is that there are just less people on the Island,” he said.“Whichever way you look at it there are a lot less people here than before, including tourists and those who have their work permits revoked or have just left as reflected in all businesses.“I think it is going to be another tough year, no doubt about it.”Teresa Chatfield, director of finance at MEF Enterprises Ltd, said that the past nine months had been the most difficult period Bermuda’s restaurant trade had seen.Ms Chatfield said that revenues for individual establishments dropped by up 15 to 20 percent and by nine percent industrywide in 2009, according to the Department of Statistics, disguising the fact that it was spread across more outlets than in previous years.She said that the proliferation of aggressive and ambitious new projects across Hamilton which resulted in numerous new outlets opening with regularity. The consequent oversupply helped to halve profitability in 2009.“In 2010 the first quarter showed a bleak picture with the aggregate results of 60 of the Island’s major restaurants showing a combined net loss of just under $1 million,” she said.“April to June showed an improvement but a poor August and then Hurricane Igor in September saw results decline again.“The last quarter will depend on December’s results as neither October nor November showed any sign of recovery. In December there were fewer cancellations of Christmas parties than last year but companies and people were looking for more value, simpler (and therefore more cost-effective) ways of celebrating. Lunches were held instead of dinner, cocktail parties were held without spouses and belt tightening was obvious fiscally if not corporeally.“The one area where there has been an increase in numbers has been at Dockyard, where the large cruise ships are now moored. Whilst the spend per head of these visitors has been low, it has produced additional business and improved revenue levels for the Dockyard restaurants and bars. Whilst cruise ships are not a panacea for declining hotel guests, they are a portion of the economy that cannot be ignored and there is no doubt that Hamilton is more vibrant and full of activity when the smaller, high-end cruise ships are in town. They may not visit the restaurants but they go to bars and nightclubs and create a feeling of activity.”Ms Chatfield said that the effects of the downturn on restaurants had been harder than any in the trade had anticipated, as recognised by Premier and Finance Minister Paula Cox and the introduction of restaurant industry payroll tax relief subsequent to meetings with the Ministry in July has provided a big boost.She said that while this aid would have helped many in the industry to get through to the end of the year, the lack of business would continue as the numbers of people on the Island continued to decline and the spending power of those remaining became diminished, adding that the long-term solution was a stimulation of the economy to encourage its growth.On the issue of competition, Ms Chatfield said described it as “fierce”, with dozens of new small operations aimed at the take out, quick food, self-service market.She said that flexibility and understanding the customer’s needs were key, with those operations heavily owner influenced benefiting from quick decisions that could be implemented equally fast.Ms Chatfield said that MEF was staying in business by working harder than ever before, keeping a close eye on costs while maintaining quality of service and food and focusing on personal service.“The prognosis for the first quarter of 2011 is poor; most restaurants are viewing it with dread,” she said. “The international companies have reduced their staffing on Bermuda, the construction industry has shrunk and middle-class Bermudians are unemployed.“The hotel sector - considerably reduced from its heights of 10,000 beds down to 5000 beds - is expecting a stronger year from April/May onwards with group business strengthening. Hotels and restaurants, however, were only 4.25 percent of gross domestic product (GDP) in 2009 (restaurants/bars were just under half of that, or two percent of GDP) so their impact on the economy is less significant than in the past.“For restaurants to see revenues and profitability recover, particularly in Hamilton, the international company sector (25 percent of GDP, plus their impact on other areas of GDP) need to return to their earlier output and staffing levels.“In 2011 therefore we would expect to see some improvement in any bars and restaurants directly impacted by an improvement in visitor levels but do not expect to see much change in revenue within Hamilton.”Among the biggest challenges facing the industry, she said, was the continual one of finding good, energetic, reliable, creative and friendly staff who want to be part of the trade in Bermuda, while the lack of skills of some school-leavers and their poor attitude towards work was a countrywide problem with no quick-fix solution and the burden of visa requirements from hiring overseas never been greater than before.“Immigration rules and paperwork are lengthy and at times formidable,” she said. “For example at present new Filipino permits are being ‘subject to closer review’ as well as an embargo on a number of other nationalities.“If you lose a staff member one day it may take three months to four months to replace them. In addition the senior wait staff are subject to term limits and many have left Bermuda as they see no future here. This has thinned the number who know and understand the Island and our clients and there are insufficient Bermudians to replace them. So newcomers arrive with less knowledge and understanding of your business and Bermuda. This impacts Bermuda’s ability to deliver more than mediocre service or food.”Ms Chatfield said that while it was easy to criticise Government, with the 5.8 percent decline in GDP in 2009, but during a 10-year period leading up to that Bermuda experienced GDP growth every year of between 3.5 percent and 11.2 percent.She acknowledged that Government had started slashing costs and addressing the burgeoning public debt, but policies were needed to re-invigorate the economy.“Costs can be slashed, but some of those costs are Bermudian salaries,” she said. “Debt can only be reduced if the economy continues to increase. Some of the policies may infuriate Bermudian voters - European countries have seen rage from voters and violence from protestors when their governments have introduced necessary measures. A number of changes are necessary in Bermuda. Some are crucial. Easing of land restrictions for foreigners and lowering of taxes on property, citizenship to those who create significant investment for the Island may infuriate, as well as a decision to allow casinos.”Ms Chatfield said that Bermuda needed to take a leaf out of the book of the likes of Switzerland which was welcoming the Island’s exempt companies and their bosses with open arms and Singapore, which recently relaxed a 40-year-ban on gambling, commissioning two casinos complete with hotel, shopping and restaurant complexes, a significant factor behind the country’s estimated growth of 13 percent to 15 percent this year.She added that there were overseas hotel groups with existing contracts for re-developing properties in Bermuda, but with many of the Island’s hotel properties in a “sea of red ink” there was no incentive for them to come in and build here.“Bermuda still has a strong economy,” she said. “But both 2009 and 2010 have seen a significant slide. The Premier has signalled it is not business as usual and that there will be change. We welcome that intention.”