UK restaurant owners could only last 10 weeks if the UK went into another lockdown, according to new research by Flipdish. The data from 200 UK restaurant and cafe owners and decision makers shows more than two in five restaurants (42%) feel this is the most important Christmas the industry has ever faced.
If a lockdown is avoided, restaurant owners predict that 20 million orders will be made over the festive period compared to usual months. This won’t be easy to achieve as 85% of those surveyed are struggling to hire staff.
The top reasons owners think the hospitality industry is facing a tough recruitment market are: employees don’t want to work long hours (42%), candidates don’t have enough experience (38%) and there simply aren’t enough people available (36%). Whilst nearly half (47%) of restaurant and cafe owners are having to work longer hours themselves, 44% are deploying technology like table ordering systems to bridge the gap. 16% of owners said hiring more staff is a top priority going into next year.
This comes as the latest independent analysis by industry expert Peter Backman estimates Deliveroo, Just Eat and Uber Eats, are capturing more than £2.5bn in annual fees from UK restaurants, a rise of £1bn since 2019.
When asked, nearly a third (30%) of owners felt angry the aggregators took so much commission during a challenging 12 months for the industry. However, some are fighting back: the data suggests 60% of owners have broken up with an aggregator since the pandemic first started and 21% say breaking away from Just Eat, Deliveroo, Uber Eats is a top priority for 2021.
When asked about other priorities for 2022, the top responses were improving the takeaway service (28%), building a new website (27%) and boosting marketing efforts (24%). In addition, one in five (20%) plan to invest in new technologies like table ordering and digital kiosks.
This comes as 40% of UK restaurant owners feel it will take between two and 10 years to fully recover financially from the pandemic – less than one in five (19%) will have recovered this year. Worryingly, the average restaurant owner only has 10 weeks of cash in the bank should another lockdown strike.
Fionn Hart, UK Country Manager at Flipdish says: “2021 has been another tough year for restaurants. VAT rises, lockdowns and low cash reserves have given many owners sleepless nights. Christmas is usually a time to celebrate and enjoy a festive windfall but with staff shortages, the Omicron variant and the HOGO (the hassle of going out), crippling hospitality businesses, it’s proving even harder than last year. With thousands of businesses at risk of going bust, the UK’s exciting restaurant industry is being threatened. In contrast, the aggregators will be enjoying big bonuses at Christmas having made more revenue than ever before.”
Japanese restaurant, Samsi in Manchester says: “Christmas is a crucial time for the restaurant. We are still reeling from the pandemic and the best way to recover is capitalising on the opportunities around the festive period and serving as many customers as possible. We have eased the pain by using table ordering and putting QR codes in place. Relying on aggregators would put the business only further in danger.”
Martin Lovell, Managing Director at Thaidee restaurant in Cheshire, said: “I used to be a Just Eat flag bearer but the aggregator was directing my customers to my competitors. I like to have a close relationship with my customers but don’t like knowing the big tech company is doing so. Any gains we made during the pandemic have been lost in commission. Now, we turn off Just Eat when we can to avoid paying such high fees. In 2021 alone, by using our own direct ordering system we have saved over £30,000 that would otherwise have gone into the pockets of the aggregators.That’s why we’re planning to leave Just Eat in 2022.”
Rahul Sharma, Director at The Regency Club in London, commented: “We are up against it this year. Staff shortages have been severely impacting the business when we’re open and the threat of closure from Omicron is hanging over us too. In fact, we had 194 cancellations in the first three days since the announcement of Omicron. That’s why it’s been so important for us to protect our margin this year and one way to do so is to avoid the aggregators. Our average order value is around £45. But given the 30% commission I give to the aggregators like JustEat and UberEats they’re taking an average of £13 per order. Compared to the £3 Flipdish charge, for us it’s the clear choice to ask customers to order direct.”
Jusnah Gadi, co-founder of Hot ‘n Juicy: “Some of the aggregators who we work with at the moment like Deliveroo and Uber Eats charge huge commissions to employ their services as well as having limited control on the back-end for restaurants to deal with customers directly which sometimes frustrates the customer journey. Since partnering with Flipdish we have been able to build a streamlined ordering system for HNJ, this was a bespoke process which meant that we were able to address all the feedback we received from customers while Flipdish technology allowed us to tailor it to those needs. It only makes sense that the near future would entail transferring all customer operations in-house at Flipdish, which would include delivery services, giving us maximum control as a company over the entire operation which would in turn also mean being able to retain maximum revenue as a business.”
Peter Backman, international restaurant and delivery analyst, said: “Many operators, who have previously steered clear of delivery, added a delivery and click & collect offering during the pandemic. As a result, the tech giants have seen revenues from commissions surge. For restaurants, giving up to 30% of revenues to middlemen is not ideal for the bottom line.”
Tanisha Broady, owner of small independent Caribbean restaurant, Rock of Virtue, in Cambridge said: “Christmas is critical for our business following another difficult year. We have money in the tills but with the new variant lowering footfall it could disappear quickly. Digital ordering – both takeaway and click and collect – have been instrumental in keeping us afloat this year. But we need to keep as much of the revenue as possible rather than handing it over to food delivery companies like Just Eat and Deliveroo. The public don’t quite realise how much money we lose when they order from these tech companies. All independent restaurants want for Christmas is for customers to order direct.”