Restaurant operators are being warned this week not to ease up on the tight cost controls they imposed as the recession deepened, even if they see an upturn in trading in the run-up to Christmas.
Peter Backman, managing director of foodservice sector consultancy Horizons, said: “There has been much talk of green shoots in the industry, but operators should treat this as the downturn leveling off, rather than trade improving.”
The warning is important for fresh produce suppliers into the sector and Backman believes consumers are likely to remain cautious with their spending, although if the economy improves, there could be a return to confidence which could push restaurant spend higher, particularly in the build-up to Christmas.
Horizons warns that businesses are likely to take a longer-term view of the economy, remaining restrained when it comes to corporate entertaining and staff Christmas parties.
Backman said: ‘Restaurant operators shouldn’t rely on an increase from corporate spend over the next few months, as companies will still be reluctant to spend money on entertaining, particularly if they are also making redundancies.”
This means that foodservice operators and restaurateurs will be looking to negotiate good deals from their suppliers and put cost-effective dishes on their menus, as well as keeping food waste to a minimum.
Backman said: “While food prices are stable and in the short term might even fall slightly, long term the economic indicators are that prices will increase again. Restaurateurs face further pressure in January when VAT returns to 17.5 per cent. This will impose an increase of 2.1 per cent across the board of VAT-able items, including meals eaten out, but not most supermarket food. This will widen the value gap between eating out and eating at home. Foodservice operators will no doubt take action, including absorbing some or all of the increase if they can.”
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