Elbrook Cash & Carry is diversifying into mobile catering in an attempt to mitigate the impact on its grocery business of increased alcohol promotions by the multiples.

The wholesaler has launched a service that prepares Indian food for hotels and functions. The new business is based at its Chak89 restaurant on the same site as its Mitcham depot and Elbrook plans to invest £100,000 in marketing it over the next 18 months.

According to new accounts posted at Companies House, pre-tax profits for the year ending July 2008 slumped 27% to £1.8m as the wholesaler dropped its prices to compete with cut-price alcohol promotions. Turnover was up 5.6% to £118.4m in the same period, partly as a result of the increase in duty on cigarettes and alcohol, which account for the bulk of its sales.

MD Fukhera Khalid said that trading had deteriorated in the months since the period covered by the accounts, mainly as a result of the recession.

"We are only a small C&C and we're pleased to have done as well as we have," he said. "But it's difficult for us to compete with the big mults and some of our C&C competitors must have been making a loss on the deals they have been offering, particularly on alcohol at Christmas."