Investors have punished UK restaurant group Chez Gerard for a trading statement in which it warned of a severe downturn in business.

The company, whose restaurants are mostly in London, blamed reduced tourist traffic, particularly from the United States, and the foot-and-mouth crisis.

It said tourism was down about 20%, which had "clearly affected" sales in its restaurants.

Chez Gerard shares had slid 23% by mid-morning to stand at 83.5 pence.

This compared with a high of 357.5p hit in June 1998.

Manchester gloom

In its statement, Chez Gerard said results for the year to 1 July would be below previous market expectations.

It said pre-tax profit would be not less than �2m, compared with earlier forecasts of �2.9m.

Business in the regions was also hit, with sales at new sites disappointing.

Chez Gerard said its Manchester restaurant in particular had failed to live up to expectations.

Job cuts

The company is now trying to find cost savings, which has included an undisclosed number of job cuts.

Plans for new restaurants in Bath, Edinburgh, Nottingham and Brighton have also been put on ice.

But openings in Oxford and Cambridge will go ahead next month as planned, Chez Gerard said.

"We are not going to be expanding at the rate we had originally envisaged but the board is committed to the growth of the business," a spokesman said.

The company said the expected recovery in tourism would drive improved performance in the coming business year.

The Chez Gerard group also includes the Livebait chain of fish restaurants.