Hospitality sector faces ‘Toughest year for a decade’

Food & Drink | Leisure & Tourism | Reports | South West
Alex Demitriou, Regency Group

Britain’s pubs and restaurants face their toughest year yet, according to procurement firm, the Regency Purchasing Group.

New levels of taxation, continuing pressures around minimum wage, the exchange rate, insurance premium tax, rising food costs and the continuing uncertainty around Brexit are all contributing to extremely challenging times.

Staffing issues are also an on-going problem for a sector which takes 43% of its workforce from abroad.

With a weak pound making wages less attractive, plus a Brexit-fuelled perception of being unwelcome, the number of EU immigrants to the UK fell by 54,000 in the year to June 2017.

Alex Demetriou, Managing Director of RPG, said: “I believe 2018 will be the toughest year our industry has ever seen for over a decade.”

Regency works with more than 2,700 leisure businesses throughout the UK, including some of Britain’s biggest and best known attractions, hundreds of golf clubs, plus pubs, hotels, zoos, farm attractions and many others.

Statistics recently released by the Coffer Peach Business Tracker, the sector’s established sales barometer, suggested Britain’s managed pub and restaurant chains saw collective like-for-like sales come out slightly ahead in January 2018 compared to 2017.

Demetriou warned these figures should give rise to very cautious optimism, at best.

He said: “It continues to be an extremely difficult time for pubs and restaurants overall. Whilst like for like sales may be slightly ahead the issue is the net profit. It is the increasing costs such as minimum wage, pension contribution, tax on cooking wine etc that is putting these businesses under pressure. The government are either unaware of the challenges or they are choosing to ignore them.

“In 2017, the Government’s Insolvency Service reported a 20% rise in restaurant failures. Food prices rose at the highest rate for more than a decade in October 2017 with vegetables rising 5.7%, coffee, tea and cocoa up 8.5% and meat up 3.5%, according to the ONS.

“Add to that the fact that the UK price of alcohol is more than 40% higher than the EU average, and you can see why businesses are still struggling to balance their books.

“The Chancellor’s decision to freeze beer duty and extend the £1,000 business rate relief for most pubs in England in last November’s Budget provided some short-term respite, but does little to provide any long-term support to publicans and restaurateurs.

“We support CAMRA’s campaign for a long-term freeze on beer duty, and for the business rate relief to not only be made permanent, but increased to £5,000 a year.

“The hospitality industry is the fourth biggest employer in the UK, so it makes a significant contribution to the nation’s economy, and more should be done to support the industry.”

The first few months of 2018 have already seen a significant number of closures, with the likes of the Prezzo Group, Strada and Jamie’s Italian each shutting one third of their restaurants in a bid to streamline the business and balance the books.

Demetriou added: “These challenging times have made purchasing tough for many businesses.

“We are pleased that we are able to help our members through these difficult times both because of the strength and buying power to secure exceptionally competitive pricing, but also in advice and expertise as to how costs could be managed or margins enhanced.”

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  1. Alex,

    Always pleased to offer our experience and expertise for the security of your clients and pleased to have been part of your solutions over the past few years !

    Carr Stocktakers

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