Ingredients prices and a staff shortage are trade’s biggest concerns over Brexit

By Nikkie Sutton

- Last updated on GMT

Rising prices: the cost of ingredients was one reason business leaders gave as a worry due to Brexit
Rising prices: the cost of ingredients was one reason business leaders gave as a worry due to Brexit
Nine out of 10 operators who took part in a CGA and Fourth survey stated that the Brexit vote has already had a negative effect, with most citing an increase in the cost of ingredients and a decrease in the availability of staff.

The Business Leaders’ Survey also found that pessimism about prospects for the eating- and drinking-out market has increased over the past quarter.

The survey, which includes responses from more than 130 leading figures in the industry, revealed 36% of bosses of pub, bar and restaurant groups are optimistic about prospects for the market over the next 12 months – a drop of 11 percentage points since the last poll of leaders in May.

While two thirds (67%) remain upbeat about their own business’s performance – that has fallen from three quarters (75%) over the past quarter.

Some 71% said the decision it leave the EU had already had a negative effect on business. It showed that a ‘soft Brexit’ was the favoured option for 62% of bosses and 69% said they believed there should be a second referendum.

Almost half of the leaders (48%) predicted consumers’ frequency of eating and drinking out will fall over the next six months while only close to one in 10 (9%) expected it to rise.

The survey also revealed some of the steps operators have taken in preparation for Brexit. Three quarters (73%) have anticipated its impacts by investing in staff training and retention, while one quarter (27%) have invested in local food and drink suppliers.

But nearly one third (31%) still consider their business to be under-prepared for Brexit, or not prepared at all.

However, amid these challenges, the research revealed some grounds for cautious optimism in the sector.

Ahead of expectations

More than one quarter (29%) of leaders said their businesses performance had been ahead of expectations, thanks in part to the twin boosts to pubs and bars of the hot weather and the football World Cup.

Some bosses also see possible long-term benefits of Brexit, especially if it cuts red tape and reduces non-EU tariffs.

CGA chief executive Phil Tate said: “Our Business Leaders’ Survey is the clearest indicator yet of the dramatic impact of Brexit on the hospitality sector.

“It reveals the huge disruption the EU Referendum has already caused to the costs and confidence of businesses and the further impacts it is likely to have on staff recruitment and retention, especially in London.

“Our research suggests a large majority of operators are now pinning their hopes on a ‘soft’ Brexit or even a second referendum.

“While many businesses are moving to mitigate the effects of Britain’s departure from the EU, some are, by their own admission, still not ready for it.

“Restaurant, pub and bar operators that are sharply focused on meeting consumers’ needs, offer good value for money and are well differentiated from the competition still have plenty of headroom to grow.

Enormous challenges

“But the survey confirms Brexit is going to bring enormous challenges for the sector into 2019 and beyond,” he added.

While there will be challenges ahead, the trade is prepared to get stuck in and tackle them, according to Fourth CEO Ben Hood.

He said: “It is clear to see the sustained Brexit uncertainty has impacted confidence among industry leaders.

“With rising costs – including those associated with employment – a shrinking talent pool and the sector’s heavy reliance on EU workers, the Government needs to navigate the complex process of leaving the EU with an approach that supports hospitality employers.

“Beyond negotiations and despite the uncertainty, what we see is an industry rolling up its sleeves to negotiate the challenges ahead.

“It is clear that employers are stepping up their investment in technology that supports up-weighted training and development as well as employee culture and engagement.

“These are the things that matter when it comes to attracting and retaining the best talent, and ultimately, as we know, are critical in delivering the right guest experience.”

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