A staggering 86% of UK hospitality operators will likely have to close in the next three years if their business costs don’t reduce and their revenue doesn’t increase, according to a new report.
Half of these (50%) will likely have to close within 12 months’ time.
The Plates to Profits Report by one of the UK’s largest nationwide wholesalers Creed Foodservice, surveyed directors, owners, managers and chefs in restaurants, hotels and pubs, and brings to life the impact the pandemic, rising inflation and increasing food costs, together with the squeezed consumer purse, is having on their operations.
Wholesale Manager spoke to Philip de Ternant, Managing Director of Creed Foodservice about the report and the state of the hospitality sector.
What were the main findings from Creed Foodservice’s Plates to Profits report?
Our report has been focused on two things: Getting under the skin of those on the front line – the managers, owners and chefs of restaurants, hotels and pubs – to genuinely understand the state of their operations; and give those operators tools, insights and ideas to generate more revenue and greater profit margins from their plates in challenging financial times.
Do you anticipate a large number of UK hospitality operators having to close?
Most notably the report showed that 86% of operators said they will likely have to close in the next three years if business costs don’t reduce and they don’t increase their revenue. Of these, 50% said they will likely have to close within 12 months’ time. It’s stark and sobering.
However, it’s not all doom and gloom, the Plates to Profits report explores in depth the challenges that are being presented, and how to face them head-on, armed with clever tactics which have been recommended by our team of industry experts, including our Insights Manager, Development Chefs and Category Managers.
What factors do you think may contribute to the potential closures?
Rising operating costs and the cost of living resulting in changing consumer behaviour and reduced booking numbers. 85% of operators told us they will need to increase their menu prices, but the same amount are worried if they do this it will put consumers off from visiting. They are stuck between a rock and a hard place.
This is alongside other challenges facing the sector such as staff shortages. If we can find ways to minimise the impact of these factors by reengineering elements of how hospitality businesses operate, we will see many of them come out the other side.
Are concerns over revenue and profit impacting the mental health of operators?
As you would probably expect, two thirds of operators said business concerns have impacted their mental health over the past 12 months. With this in mind the research highlighted the importance of the entire supply chain working together rather than suffering alone.
It’s important to remember that as a sector we’re all facing similar challenges; no one is immune. By coming together rather than working independently and siloed, we’re stronger and can support each other through difficult times. Knowledge and idea sharing is invaluable.
What advice do you have to help foodservice operators increase profits?
The report explores several key areas which will help operators increase profits. One of the areas we explore in detail is making savings through careful ingredient and food waste management. Utilising pre-prepared products, using bespoke pack sizes, and purchasing bake-off products can be hugely beneficial, particularly when it comes to reducing energy bills and streamlining staff efficiencies.
However, this is just touching the surface; the report also explores how to maintain food quality with a reduced workforce, marketing and communicating your offer, and initiatives to drive customer spend.
How many products are in Creed Foodservice’s range?
We have over 6,500 across our ambient, frozen, chilled, non-foods, butchery and fresh produce categories.
Do you run promotional programmes? How often do they run? How many products are included in the promotional programmes?
We run promotional programmes on a monthly basis as standard, across all product categories. On average, we have over 300 lines with strong savings for our customers vs. their normal prices at any one point. Alongside this, we run two points schemes a year for a period of 3 months, where our customers collect points across a wide range of products they buy. At the end of the scheme, these points can be redeemed for free stock, money off future orders, or prizes to reward staff.
As a foodservice partner we are committed to keeping prices as low as they can be for our customers and work hard alongside the Country Range Buying Group to do so. With challenges around inflation there are occasions when the best option is to source an alternative ingredient or product, and it’s here we can offer unrivalled support to our customers, helping with menu and recipe tweaks. The good news is that with 6,500 products available daily, over half have not moved in price for the last six months due to the great work our trading teams have been doing.
What geographical areas do you deliver to?
From our three geographically situated distribution centres our route network stretches across the country making us a national foodservice distributor in a range of ‘out of home’ markets including; care, education, hospitality and destination leisure.
How much warehousing space do you have?
We have over 8,000 pallets of temperature controlled warehousing space which is ambient, chilled and frozen. Recently we’ve installed solar panels at four of our five sites, helping us move towards our goal of being carbon neutral by 2025.
What investments have you made in your warehousing recently?
We continue to review warehouse technology with investments made this year in new racking for slow moving and split products, together with upgrades in our hardware for voice technology.
How many vehicles do you have in your fleet and are they multi-temperature vehicles?
We currently have over 100 temperature-controlled vehicles on the road each day. They vary in size from 3.5t to 18.0t to accommodate the various customers we have and their site access.
Has the fleet been expanded recently?
Yes, each year we invest in new fleet, whether that be replacements or additional vehicles. During 2023 we have already had 15 new vehicles, with a further 9 due to be rolled out by the end of the year. Additionally, we have over 20 confirmed for build next year. We’re always looking to make our fleet as efficient and eco-friendly as possible, to ensure we can keep the number of journeys and therefore emissions as low as possible.
How many staff do you employ?
We currently employ over 430 people and this number continues to grow.
How do you support customers with allergen and nutritional information?
We use Saffron, a web-based catering management solution for handling nutritional information and also precise costing, ideal for single and multi-site operations. For some of our customers we also integrate into their own systems to help them manage menus.
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