Hospitality is already facing a change since the vote to leave the EU was announced in June, including more difficulty recruiting staff, according to British Hospitality Association (BHA) former head Bob Cotton who spoke at accountancy firm Wellers’ round table in London yesterday.
“There’s change going on, but what we’ve got to get back to is how that’s going to impact on business,” he added.
According to the Office for National Statistics, the increase in consumers’ disposable income over the years, which has in turn led to more consumers eating out, was set to drop, Cotton explained.
“With that, what we have got to do is focus on business, customers and location pressures.”
Combination of pressures
That, combined with other pressures such as business rates, the national living wage and now issues with Brexit would further compound the on-trade.
On business rates, Cotton suggested abandoning a one-size-fits-all mentality and implementing a method based on location instead.
Association of Licensed Multiple Retailers chief executive Kate Nicholls, who also spoke at the round table, highlighted a misconception among some of the country’s leaders that the on-trade had it good.
"We know there will be a two-year lag in growth in hospitality," Nicholls said.
“What we get [in feedback] when we talk about challenges is that businesses have had it easy and have managed to get through with low wage costs,” she said.
“People say we’ve grown fat, but our margins are stripped to the bone.”
It was perceived the on-trade and the hospitality sector was able to deal with crises by "flexing" and being leaner with rotas, but that wasn’t the case, the trade boss added.
So far, hospitality had performed well and had contributed significantly more to the economy than most other sectors.
Continued growth forecast
“We are forecast to continue growing by 4% in the next five years and provide 22,000 more jobs – that is what is forecast,” said Nicholls.
However, margins were stretched as a result of increasing bureaucratic pressures and the hospitality trade had been vocal about it.
Nicholls continued: “We did a survey recently with the BHA and KPMG looking at margins to plot what costs had an impact on them. The average margin [among respondents] is 10% and that goes down to a low of 6%.
“The challenge we have got [to get people to understand] is that’s not profit and we’re not [a sector of] fat cats.
“If they [Government] squeeze us more then there will be falls.”