The Impact of Brexit on the Catering and Hospitality Industries

On 8th June, the snap general election took place. The reason for this was, according to Prime Minister Theresa May, due to a focus on Brexit: “The country is coming together but Westminster is not […] division in Westminster will risk our ability to make a success of Brexit.”

Whilst talks on Brexit developments change on an almost daily basis, we can’t help but wonder what will happen in the food, catering and hospitality industries as the Brexit saga develops.

Catering Equipment specialists Nisbets has some unique insights to share on the topic. They surveyed 823 catering professionals* on how they think Brexit will impact their business…

The impact of Brexit: Costs and cutbacks

Since Britain voted to leave the EU, 65% of catering professionals have noticed cost increases in raw ingredients.

Of the 286 respondents who answered the question ‘Where have you noticed cost increases, if any, since Britain voted to leave the EU?’, a significant proportion mentioned ‘raw ingredients’.

18% of the professionals who responded mentioned that they were ‘not sure’, 6% had noticed an increase in business rates and 4% had noticed an increase in ‘labour’. 3% noted the rise in cost of ‘equipment’ and 2% noted ‘rent’.

Some comments that accompanied the responses were that increases had been seen in ‘all of the above’, and conversely ‘no increase’ in prices had been seen at all.

This is supported by research published in the Independent that in March 2017, food prices rose at the fastest rate in more than three years. This was caused by the costs of the pound – and global commodity hikes. As the Nisbets survey respondents anticipated, it is estimated that this will include an increased cost to the end-user.

Catering professionals plan to absorb the additional costs brought about by Brexit by ‘increasing prices’.

Of the 279 respondents who answered the question ‘How will you absorb these additional costs?’, 38% noted that they would ‘increase prices’.

The other approaches to absorbing the costs of Brexit included ‘reducing food waste’ at 15%, 14% were unsure, 13% said they would ‘buy more local produce’ and ‘portion control’, 4% would opt for ‘grow your own produce’ and 3% would consider staff cut backs.

The impact of Brexit: A feeling of uncertainty…

The majority of catering professionals are unsure about what type of impact Brexit will have on the industry. Of the 300 respondents, 53% said they were unsure when asked ‘What affect do you think Brexit will have on your business?’.

19% of catering professionals believe Brexit will have a ‘slightly negative’ impact on the industry. The remaining opinions were divided quite evenly, between ‘slightly positive’ at 10%, ‘very negative’ at 9% and ‘very positive’ at 9%.

The majority of catering professionals are unsure about the impact of Brexit on their customer numbers. Of the 300 respondents who answered the question ‘What affect do you think Brexit will have on your customer numbers?’, 66% remarked that they were unsure of the impact.

Opinion of the rest of the respondents was close, with 12% believing there would be a ‘slightly negative’ impact, 9% believing a ‘slightly positive’ impact, just under 9% believing it would be ‘very positive’ and 4% predicting ‘very negative’.

Other expectations and insights…

Staff may be harder to hire.

Reports by the Guardian have anticipated that catering (alongside construction and care) may find it hard to recruit in their industry post-Brexit. This is due to the understanding that hotels, cafes and restaurants rely on EU-born and non-EU-born workers (of 1.9 million industry workers, they make up 634,000), combined with the collapse of the pound and the uncertainty of the place of EU nationals in the UK.

Supplier contracts may be impacted.

As reported in Big Hospitality, catering and hospitality professionals could have their supplier contracts impacted. Clauses related to single market trade will need to change when dealing with EU businesses, which could make trade more complex.

An optimistic future?

However, as the pound becomes weaker against other foreign currencies, staycations may be on the rise for holiday makers across Britain.

Providing a major boost to the UK economy, families usually spend around 20% of their net income on a holiday, which means that a substantial amount of disposable income will be reinvested into the UK economy and the tourism industry. Last year in 2016, 7.3 million people holidayed in Britain, and this figure is set to rise as the impact of Brexit becomes even more apparent.

Although the future of the catering industry is uncertain after Brexit, if leisure and tourism is set to rise in the UK as a result of the falling pound, this may actually help the catering industry in the long-term, as more people are set to stay at home this summer rather than travel abroad.

They were from a variety of different businesses, which can be categorised as café (25%), restaurant (20%), pub or bar (15%), fast food or takeaway business (9%) contract catering company (6%), wedding or events caterer (6%), community centre or social club (5%), care home (4%), street food trader (4%), mobile caterer (4%), hotel or guest accommodation (2%).

(Source: Nisbets)

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