The quoted restaurant and pub sector suffered a massive sell-off yesterday as profit warnings from Clapham House Group and Regent Inns sparked fears over consumer spending.

ScS Upholstery, the sofa specialist, added to the gloom by warning of “a significant adverse impact” on sales, which it blamed on the “sub-prime debt markets and the resultant credit squeeze”.

However, The Restaurant Group (TRG), which owns the Garfunkel’s and Frankie & Benny’s chains, played down the wider implications of the Clapham House profit warning, insisting that it would not be adjusting its previous market guidance. Carluccio's, the deli-dining chain, is also expected to report resilient trading with today’s scheduled full-year results.

Shares of Clapham House, which owns such brands as Gourmet Burger Kitchen (GBK) and The Real Greek, fell by 98½p to 150p - a fall of almost 40 per cent - after the company warned investors that profits over the next two years would be “significantly below original expectations”.

Regent Inns, which owns the Walk-about, Jongleurs and Old Orleans chains, fared even worse as its shares fell by 17¾p, or 41.5 per cent, to 25p, after it reported a 2.8 per cent decline in like-for-like sales in November. It said that while the late-night market had become more competitive following licensing deregulation, the decline was also “reflective of overall growing consumer caution”.

Clapham House said that although trading in its high street restaurants, notably its GBK chain, was holding up well, its 11 Tootsies eateries in shopping and leisure centres had suffered from a decline in footfall.

Its comments are reflected in figures out today from the British Retail Con-sortium (BRC) showing that total retail sales in November rose by just 1.2 per cent on a like-for-like basis. Although the figure was stronger than the 1 per cent recorded in October, Kevin Hawkins, the BRC’s director-general, said the “modest growth” in sales volumes was mainly a result of an upsurge in discounting at the end of the month. “This points again to a very price-conscious Christmas for many consumers,” he said.

The figures come at a time when income growth is weak by historic standards once inflation is taken into account. Real disposable income rose by just 0.5 per cent in the year to the second quarter, figures from the Office for National Statistics show. The past year has seen some of the slowest rates of income growth since the late 1990s as inflation and taxes take a hefty chunk out of moderate pay rises.

Clapham House’s woes were exacerbated by rising rent levels for new sites and delays to two openings, while the interest bill on the debt taken out to fund its rapid expansion had risen because of higher Libor rates. As a result, it was cutting back its opening programme from about 30 outlets to 18, including five franchised GBK units overseas. David Page, the chairman, said: “We think we’re being a bit brave. We’re the first out of the blocks. It may take a few months for others to follow suit, but they will.”

He said that reining back openings was a “prudent and pragmatic” move given the economic uncertainty. “We are still very profitable. If things change in six to nine months we can up the opening programme again.”

Some rivals were happy to distance themselves from Clapham House’s woes. A spokesman for TRG said: “There is no change to the guidance we gave at the end of October. TRG has no intention whatsoever of cutting back on its rollout and new openings are performing well.”

Its statement failed to save it from the general share sell-off. TRG fell by almost 12 per cent to 192¼p, while Mitchells & Butlers, the embattled All Bar One and Harvester operator, lost 5.3 per cent to 546½p. Analysts said the share falls could spark private equity interest, citing the example of Mr Page’s previous company, Pizza-Express, which was taken private in 2003 after a profit warning.

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