Cost pressures including rising business rates, food inflation and staff costs the major challenges faced by industry according to CGA Peach's 2017 Business Leaders Survey
Cost pressures including rising business rates, food inflation and staff costs the major challenges faced by industry according to CGA Peach's 2017 Business Leaders Survey.
This annual poll of 250 senior executives in the restaurant and pub sector has thrown up interesting insights into the confidence of the sector, while also suggesting - despite the tough trading environment - that the drinks offer is all too often being under-utilised as a revenue stream.
The report's headline figure shows a majority of 68% of business leaders saying that they are very or fairly optimistic about the future for their businesses, up 6% on a survey conducted late last year.
This also represents a bounce back in confidence from a low of just 24% reporting that they were optimistic in July 2016.
However, the sector does face serious challenges, with 79% citing business rate rises as a prime concern, 80% concerned about inflationary pressures on food and 59% worried about rising wage costs.
On the drinks front, it clearly appears that opportunities exist for upping the ante with a more premium offer.
While 41% of business leaders predicted increased consumer spending this year, only 37% rated their own alcoholic drink offer as market leading, while 22% were candid enough to admit that their offer was market lagging.
Continuing the focus on drinks, the survey's respondents predicted that craft beer will continue to lead drinking trends for 2017 (52%), with artisan coffee, micro-distillery spirits, healthy softs, premium mixers and cocktails high on the list. Sparkling wine has a look in at 13th place (18%), but still wine is noticeable by its absence in the top 15 drinking trends cited.
The effects of Brexit so far mostly relate to rising costs of food and drink, down to the fall in sterling, with food-led outlets almost twice as likely to have already felt the impact as drink-led outlets. In addition, 73% say they have or will pass costs on to consumer, with 85% also looking to make other cost and efficiency savings this year.
Some 79% also said they expected to see more business failures in 2017 than there were in 2016, although 42% are looking to open 10 or more new sites this year, suggesting that the financially strong will take the opportunity to grow as other businesses are forced to close doors.
On the already difficult issue of staff shortages, 55% anticipated less availability in 2017, with 88% rating staff engagement as increasingly important, with an obvious link to the four out of five who confirmed that delivering a high quality customer experience will be essential to the forward success of their businesses.
Digging deeper into the responses reveals that smaller businesses, with fewer outlets, plus newer businesses, are the most optimistic about their prospects for 2017 and beyond, with flexibility a key to dealing with the challenges ahead.
Commenting on the report, Martin Williams, who has just completed on a site at Brewery Wharf in Twickenham for his third venue, beginning the planned roll out of a more casual neighbourhood M Bar & Grill off-shoot to his London M Restaurants, added words of caution regarding overly optimistic responses.
"This report needs to be balanced with the far less bullish views of entrepreneurs, small operators and start ups," he said, being one of the Peach business leaders. "It's all very well for seasoned CEOs of chain restaurants to be bullish, but it is the most difficult environment I've known in 20 years in the industry and one which the new generation of restaurateurs will find very challenging."
"Rises in rents, rates, living wage, costs of imported and domestic products, then a chronic staff shortage, due to the UK appearing unwelcoming to a European workforce on which we rely heavily will all be serious challenges," Williams added.