The State of the UK Foodservice sector
Food sales into the catering industry were last year worth £10.1bn, according to new figures released this week by Horizons FS.
However, food (input) inflation is forecast at +6.5% while output prices are forecast to rise at +3.25%. While these are high by recent standards, the crucial thing is that input prices are rising almost 3% faster than output prices – putting great strain on operators’ already slender margins.
“Many operators are also overlooking the massive impact that food inflation will have on this year’s margins. Operators' food costs are rising at 5% at the moment and I'd expect this to go significantly higher. Selling prices are rising much more slowly - and although higher rises might stick if consumers feel that inflation is here to stay a while, margins will be squeezed. Any operator that is under-resourced financially is facing a credit crunch.”
In the wake of last week’s news that Laurel Pub Company is to go into receivership, Horizons FS reaffirmed that the pub market will suffer more than other sectors in the current downturn. “Since the smoking ban many pubs have switched their focus from wet-led sales to food, meaning they are now competing with high street restaurants. This has lead to an over-capacity of outlets in the mid-spend sector, which means operators are having to compete harder against a declining number of consumers and increasing pressure of margins.”
“The market will have to rationalise by driving the less successful operators, whether restaurants, quick service or pubs, out of the market. In practice this means more businesses will fail.
New figures released this week by Horizons FS show that average spend on a meal in a UK restaurant is now £11.11 per head*. Average spend on a meal at a pub is £5.22, while spend at a fast food restaurant is £4.60.