Market insight: Chain reaction

A new report has been launched by Creed Foodservice, revealing how issues such as inflation are adversely affecting the whole of hospitality...

A staggering 86% of UK hospitality operators will likely have to close in the next three years if their business costs don’t reduce and their revenue doesn’t increase, according to a new report. It also found that exactly half of these will likely have to close within 12 months’ time.

The Plates to Profits Report, by one of the UK’s largest nationwide wholesalers, Creed Foodservice, surveyed directors, owners, managers and chefs in restaurants, hotels and pubs. It brings to life the impact the pandemic, rising inflation and increasing food costs, together with the squeezed consumer purse, is having on their operations.

Philip de Ternant, managing director of Creed Foodservice, said: “We all know the hospitality sector has taken a real hammering, but to see the number of operators who could very realistically be forced to close in the coming months is sobering and stark.

“Inflation and rising food costs are affecting the entire supply chain, from suppliers, logistics companies and transportation to the frontline, such as restaurants, pubs and hotels. Over the last year we've seen a 27% increase on eggs and baking potatoes, another staple, has risen by £8 a case.

“Combine this with consumers who are also having to review their expenditure – nearly half of operators told us that the number of bookings at their establishment have reduced – the pressure mounts even more.”

Unsurprisingly, 63% of operators said business concerns around revenue and profit have impacted their mental health over the past 12 months.

de Ternant added: “Our Plates to Profits Report is in part about genuinely understanding what state the sector is in, but more so about giving operators advice, guidance and actionable ideas on how they can increase the profit on every plate they serve and drive maximum revenue into their establishment.

“The vast majority of operators – 85% – told us they will need to increase their menu prices to stay financially viable. However, 83% are worried that if they do this it will alienate consumers and put them off visiting their establishment. They feel stuck between a rock and hard place.

“We’ve worked with our insights team, chefs, category specialists and senior figures to look at every aspect of an operation. These include reducing food waste; maximising margins on dishes; navigating staff shortages to still create quality dishes; communicating the story behind the menu to consumers; utilising seasonal produce; recipe ideas; and increasing prices through offering premium sides, high-quality specials and set-menus. We’ve also liaised with some of our restaurant and pub customers who have contributed thoughts to the report.

“One of the most uplifting aspects is how it’s shown us the sector’s fighting spirit is well and truly alive. We’re seeing some really great innovation coming through, both from the report findings and also what we’re seeing when we’re out visiting customers.”

Maximising margins

Which dishes operators recommended to Creed

  • Burgers are the dish that delivers the highest margin for most (41%)
  • Over a third said Italian fare, including pizzas (37%) and pasta dishes (35%), make the most margin
  • Nearly a quarter find that steak (23%) and chicken dishes (22%) deliver the best margin, as do plant-based dishes

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