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More catering workers may lose their jobs during the Lunar New Year as diners continue to watch their budgets, the sector has warned.

 The warning came after about 260 workers of fast-food chain Wendy's and baker Denny's lost their jobs. Wendy's closed on Monday and Denny's yesterday.

 Workers' representatives of Wendy's and Denny's met management in the presence of labour officials yesterday. At both meetings they were told by the receivers to wait until cash-flow positions became clear.

 At least $9 million in wages and severance is owed to the workers - $3 million to workers at Wendy's and $6 million to Denny's.

 'We are satisfied with the company reply and look forward to the next meeting. If it is willing to pay us, we would save trouble and time having to go to the insolvency fund,' a Wendy's staff spokesman said.

 Wendy's seven directly operated outlets in Britain were forced to close in October because of high property and operating costs.

 The firm, which grossed more than $7 billion in company-wide sales in 1998, was dealt another serious blow last month by the sudden death of its 56-year-old chairman, Gordon Teter.

 Despite the relatively small number of workers involved in the Wendy's and Denny's closures, the industry fears worse is to come.

 The chairman of the Association for Hong Kong Catering Services Management, Yeung Wai-sing, said recent research by the association indicated falling consumption by diners, with average spending per customer dropping by seven to eight per cent in the fourth quarter of last year from a year earlier.

 'As the economic downturn causes people to adopt more simple eating habits, many high-class restaurants are forced to drop prices to compete,' Mr Yeung said.

 However, price-cutting meant it would be difficult for such restaurants to earn enough to sustain the high operating costs and some might have to cut staff.

 Secretary for Education and Manpower Joseph Wong Wing-ping said yesterday the closure of Wendy's did not mean the economy had worsened. 'Over the past months, the economy has improved and people's confidence has recovered,' he said.

 Unemployment figures in the catering and retailing sectors should fall soon as restaurateurs and retailers had indicated to the Government they planned to hire more staff, Mr Wong said. He gave no figures.

 Mr Yeung said large restaurants would also consider mass lay-offs to avoid hefty contributions to the Mandatory Provident Fund, which comes into effect at the end of the year.

 The secretary of the Eating Establishment Employees' General Union, Poon Tze-wan, said: 'I don't think the Wendy's closure will spark off a chain reaction to the rest of the sector.'  Ernest & Young, appointed provisional liquidator for Denny's yesterday, said it was seeking possible buyers.



Lunar New Year belt-tightening feared after Wendy's and Denny's forced to close