Opportunities and challenges for operators in 2017

Opportunities and challenges
01/03/2017 - 16:01
The UK’s restaurant and pub sector faces a number of challenges in 2017 with some lurking just around the corner. However, business property specialists Christie & Co found reasons to be optimistic at yesterday’s breakfast briefing.

The cost of issues such as National Living Wage, the Apprenticeship Levy, pensions auto-enrolment, Brexit, and utility costs were the main topics of discussion, but it was business rates that caused the most concern.

Simon Chaplin, head of restaurants at Christie & Co, said he doesn’t think operators are preparing for business rates. He revealed he had spoken to a number of businesses that, despite the new rates coming into effect this April, had not looked at their rates or given a thought about appealing.  

Christie & Co revealed that businesses whose rateable values are based on turnover, such as hotels and pubs, have been hit the hardest, with increases of up to 516%.

The uncertainty around Brexit was a cause for concern at a panel discussion during the event, as the sector seeks to deal with a potential workforce shortage. 

However, the ALMR’s chief executive Kate Nicholls remained optimistic and said that the industry wouldn’t fall off a ‘cliff edge’. She revealed that Brexit secretary David Davis would allow two to five years to replace migrant workers. The ALMR has suggested a guest migrant permit as a solution to the industry’s reliance on immigrant workers, of which it is 43% reliant.

The government’s Apprenticeship Levy also comes into effect this April, but Christie & Co’s Ramzi Qattan, associate director, said it has a potential upside. Each hospitality apprentice could add £5,200 to the bottom line.

Kris Gumbrell, executive chairman at Brewhouse & Kitchen, backed this up and said the apprenticeship levy is a 'good start' to change how we see skills. He added that it was a question about whether or not a business is committed to investing and bringing apprentices through.

Nicholls said: “There needs to be a shift in perception of skills and we need to also look at soft skills.” The ALMR chief noted the skills of baristas as an example of the types of skills in the industry that need more recognition.

The sector also faces running cost challenges and Neil Morgan, managing director of pubs & restaurants at Christie & Co, said that in some cases 49.3% of a businesses turnover is attributed to running costs, with this figure expected to rise.

However, Morgan said there are ‘opportunities for a proactive business’ despite numerous challenges to the sector. He added that operators should look at alternative revenue streams, such as utilising beer gardens all year round and making the most of the potential ‘staycation’ boom that could happen as a result of Brexit. Ultimately, he said it all comes down to improving the customer experience and spend.

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