Subscriber login Close [x]
remember me
You are not logged in.

Caution urged as eating-out sector returns to growth

Published:  19 March, 2014

The restaurant sector is returning to growth, but operators are urged not to take the recovery for granted, hears Horizons annual conference.

Peter Backman, managing director of the food service consultancy firm, said that while the sector grew nominally by just under 1% to £44.9 billion in 2013, it is likely to return to 2006 levels this year, with nominal growth of 1.8% or 3. 8% in real terms.

"It's been a long time since I have been confident enough to predict real growth in the foodservice market," said Backman. "In the recent past the margin squeeze that operators have experienced has eased and for the last couple of months we have been moving into positive territory - this is good news for businesses in the sector."

The briefing, which was held at London's Barber-Surgeon's Hall yesterday and focused on Return to growth: Myth or Reality, included over 80 guests from the industry.

Backman singled out pub restaurants, managed branded pubs, pizza delivery operators and coffee and sandwich shops, which have all seen growth of 10% in the past 12 months, as performing well.

"There are inherent risks in believing the market is now in recovery; consumer confidence is still fragile; weather events can have a huge impact; political uncertainty, particularly surrounding the referendum in Scotland; international uncertainty in the Ukraine and in Syria; and of course the unexpected. No one could have predicted horsegate."

Backman said it was important to focus on creating a brand that inspires customer loyalty, rather than aiming to be the lowest cost operator.

Senior industry executives at the briefing expressed concerns that as the UK's productivity improves, real wages would rise along with it making it harder for the hospitality industry to retain and recruit good staff.

ASK Italian managing director Steve Holmes said that while ASK was investing millions of pounds into the business - with one refurbishment completed every five days - retaining and recruiting staff was a challenge.

Mitchells & Butlers chief executive Alistair Darby agreed that staffing was an "overheating problem".

 "The challenge is trying to recruit good people. We have to change our mindset on training, working hours and salaries in this sector," said Darby.