Hospitality operators' challenges in 2016 highlighted by new report

Of eight major industries, including manufacturing, retail, finance, construction, healthcare and technology, the food and drink industry experienced the lowest growth during the past financial year, according to Company Check's Business Census 2016​.

Almost half of foodservice businesses surveyed said their company had experienced either flat or no growth during the past financial year – 10% more than businesses in the retail industry.

Difficulties with finance, the current economic climate (26.32%) and recruitment issues (21.05%) were listed by respondents as the top challenges faced by their businesses during the past year.

Unsurprising​

Alastair Campbell, co-founder of Company Check, said: "It's unsurprising that recruitment remains a top concern for the food and beverage industry with the impending EU referendum and the rise in the national living wage being two political events with the potential to impact on the ability of pub businesses to attract and retain staff."

Politics was expected to cause further anxiety for operators in 2016, with 7.89% of respondents saying they expected it to be their biggest challenge – up 2.5% on 2015.

Finance would remain their biggest worry according to 28.95%, followed by the economy (23.68%).

Craig Allen, co-founder of the Change Group, said: "Undoubtedly, the increase to the national living wage will have both a positive and negative impact across the whole of the hospitality industry well into the future.

"Inevitably there is a fear that jobs could be lost due to businesses slimming down their workforce to save money or else they will pass the cost on to the consumer by raising prices – which, in turn, could put people off visiting, also resulting in potential job losses, creating something of a vicious circle."

Retention​

However, the national living wage would improve the lives of the workforce, potentially improving staff retention for low-skilled jobs and attracting people to consider careers in the sector thanks to higher pay rates, he added.

In January, the Publican’s Morning Advertiser ​reported that overcapacity in the eating-out sector​ could lead to slow growth for operators and pressurise like-for-like sales in 2016.

Growth in the number of food-serving outlets was strongest in the pub trade during the past decade, with pubs whose food sales exceeded their drinks sales up 135% from 2,600 in 2001 to 6,100 in 2014.