With the uncertainty of a potential no-deal Brexit drawing closer, leaders in the restaurant industry are becoming less confident about their sector, with only 30% optimistic about the future of the general market, according to insight consultancy CGA’s latest quarterly Business Confidence Survey.
Verdict Foodservice spoke with industry professionals about the impact Brexit is and will have on the restaurant industry.
John Trueman, CEO of leading guest management system Quadranet Systems, has been in the restaurant industry for decades
“Aside from the obvious concerns restaurant and hotel owners have about the European migrants currently working for them, whose future remains uncertain, the impact on staffing has already been negative. Europeans are returning to their native countries rather than face uncertainty, making the pool of staff available to the industry ever smaller.
“Brexit is already having a seismic impact on our sector in other ways, too: the devalued pound is naturally resulting in fewer people eating out, choosing instead to pinch their pennies until after 31 October or whenever Brexit may be, when they will be able to assess what their disposable income looks like.
“Many of us feel left in the dark and planning for the future has become nigh on impossible. Brexit would be bad for hospitality, but uncertainty is worse. The sooner we have some clarity on what lies ahead, the better.”
Jason Smith, spokesperson for Business Electricity Prices (BEP), which specialises in helping businesses reduce their energy bills
“With businesses seeing an average of a 43% increase in their electricity bills over the past ten years, and Brexit’s uncertainty lurking around the corner, it’s no wonder business owners are looking for smart ways to cut costs.
“The hospitality industry, especially restaurants, could potentially see a big change in their number of covers, as dining out is a luxury that people to tend to cut out when tightening their belts. In order for the restaurant industry to have the best chance of survival, it is important to look at cuts that will not affect quality of service.”
Chris Miller, founder of White Rabbit Fund, a creative development platform that backs and invests in food entrepreneurs
“Without question, Brexit is a disaster for the hospitality industry in the UK.
“We have already seen increases in the cost of ingredients. Be that driven by the declining value of the pound, or simply giving suppliers a good reason to trigger raises. Under a no-deal scenario, with the implementation of tariffs, this will only get worse.
“As for the staff, a lot of our best staff are from Europe. Where they would often come to the UK to work and send some money home, with a weaker pound this is a less attractive proposition. In addition, I do believe there is a factor of feeling unwelcome. So, where many workers went back home over the summer, they simply are not coming back in the same quantity. This is creating a real shortage of staff.
“In the UK, hospitality has not been seen as a career and there simply isn’t the local talent pool to fill vacancies. The result comes from economics 101 – shortage of supply means increased price – so we will continue to see inflation in staff cost.
“The picture does not look good and I think it is pretty clear we are heading into a recession. We are ten years into a bull run when historic averages show recessions happen every seven years.
All that said, people still need to eat and drink. The restaurant market will not disappear, but there will be a massive shakeout. Operators really have to be at the top of their game to survive and prosper in these challenging times.”
Gareth Ogden, partner at haysmacintyre, who has 12 years’ experience in hospitality and advises his restaurant clients on topics such as financial planning for Brexit
“The restaurant industry is currently facing complex challenges. When we speak to operators the most common buzzword is ‘uncertainty’ which is partly, but not entirely, attributable to ongoing Brexit deliberations.
“Economic uncertainty is a serious concern in respect of its impact on consumer demand. The impact of Brexit on food costs is also causing anxiety, dependent as it is on the nature of the final Brexit outcome: deal, no-deal or no Brexit. Both of these factors are holding back many operators from further investment as they wait to see how the political situation plays out.
“However, it is the uncertainty over staff recruitment which is perhaps most obviously being felt currently. The uncertainty over the impact of Brexit on the availability of labour is compounding an already prevalent problem: recruiting good quality staff, including chefs.
“In the 2018 haysmacintyre UK hospitality Index, 77% of respondents stated that they felt Brexit would negatively impact their ability to recruit staff. Initial results for the 2019 Index suggest this figure has increased to over 80%. Operators are seeking clarity over the Government’s immigration policy and whether freedom or restriction of movement of labour from the EU will ultimately prevail.”
Jamie Shail, managing director at Rothay Manor Hotel & Fine Dining
“Since the referendum one of the biggest impacts on the hotel and restaurant industry has been the shortage of staff. We rely on a pool of talent from European countries, and not only have they felt unwelcome, the euro-sterling exchange rate has meant a 20% decline in their salaries, and many have made the decision to return to their home or other European countries.
“The UK doesn’t have the experienced workforce to replace them. It is also this decline of sterling against the euro which is currently leading to higher costs of imported food goods. We have seen a significant price rise on many food products from dairy to fish.
“If the UK leaves the European Union with a ‘no deal’ along with the continued staffing issue, which may, in fact, get worse, we will also suffer a serious supply and demand problem. With the UK falling into WTO regulations this would immediately increase the price of imported foods by 20% and many imported products could be left at ports while lengthy checks are carried out.
“We are also likely to see further price rises from the continued decline in sterling and the increased demand for the limited production in the UK, with in excess of 30% of food products being imported.”