Brexit and rising costs will present out of home eating and drinking operators with big challenges in 2017—but new openings growth, technology and the Night Tube are among the reasons to be optimistic about the sector’s future.
Those are among the findings in the second issue of Future Shock, a major new collaboration between CGA Peach and the ALMR that provides a ‘state of the nation’ report into the eating and drinking out sectors and rounds up important new insights into consumer, supply chain, drinking and economic trends for operators.
The report shows that operating costs now account an average of nearly half (47.7%) of turnover for businesses in the sector, with rising property and staff costs an increasing challenge for many of them. Another staffing issue has arisen from Brexit and the resulting uncertainty of the future of EU migrants, who account for close to half (46%) of the workforce in hospitality and tourism.
But the Future Shock report also demonstrates how technology, and social platforms like Facebook, Twitter and Instagram in particular, are now integral to the planning of nights out, and can be harnessed by operators to increase their profile and sales. Another opportunity comes from the introduction of the Night Tube in London, with CGA Peach data indicating that there are more than 3,000 licensed premises within 500m of stations on the lines that now operate around the clock.
Other key stats revealed by the exclusive report include:
- The number of food-led licensed venues in Britain has increased by 13.5% in the five years to September 2016—compared to a 12.4% drop in the number of drink-led venues
- Nearly half (46%) of British consumers say they now eat out at least weekly. A third (33%) say they drink out at least weekly
- Three in five (60%) consumers say they trust online reviews, rising to 71% of 18 to 24 year-olds—an indication of the huge importance of platforms like TripAdvisor and social media
- Half (52%) of British consumers think the government’s planned sugar tax on soft drinks is a positive change—but only a fifth (19%) are likely to reduce their sugar consumption as a result.
CGA Peach business unit director Jamie Campbell said: “It has not been an easy ride for operators in the eating and drinking out markets in 2016, and CGA Peach’s research shows that any growth is hard won in an intrinsically flat market. And with the seismic shock of Brexit yet to play out in full, and property and staff costs still rising, conditions aren’t likely to get much better in 2017. But as Future Shock shows, there are still plenty of growth opportunities for the leading brands over the coming year. By good use of technology, smart marketing and giving consumers the food, drinks and experiences they want—plus, crucially, some support from government over industry issues—operators can look forward to 2017 with optimism.”
ALMR chief executive Kate Nicholls said: “The National Living Wage, business rates reform, Brexit—there are a lot of issues that eating and drinking out operators will need to stay on top of as we enter 2017, and the ALMR will be campaigning loudly and proudly for the sector within government. This latest Future Shock report provides important intelligence for that work, and presents a one-stop-shop for information for everyone interested in the sector. It is a balanced and honest health check—a digest of some of the challenges we all face but also of the many reasons we have to be proud of our creative and economically important work.”