Word of cost pressures in the hospitality industry will hardly come as a surprise, but news from the International Grains Council and elsewhere, of rising food raw materials should still influence the thinking of leaders in the sector. These pressures are global, resulting from the impact of climate volatility on winter and grain crops. In the UK market, therefore, these will only compound the recent impact of depreciating Sterling, and any further deterioration that might result from any Brexit deal not meeting with the approval of the forex and wider capital markets.
These challenges are serious but they are by no means terminal. Despite some well-publicised challenges in recent years, the casual dining sector remains beloved of the British public. The leading chains are still a keystone of the urban and commuter lifestyle, not just in the conurbations, but in market towns and mid-sized suburbs across the country. In the face of squeezed disposable incomes and other systemic pressures, market appetite remains strong – and while much has been made of the openings for independent operators, consistency and predictability are still genuine virtues for large swathes of the buying public.
Astute management, therefore, will see the casual dining sector through whatever further cost-based challenges may be in the offing, whether that results from climate-induced price volatility, or from political influences, or from elsewhere. The careful management, however, is vital, and requires that business leaders in the sector look at financial performance in the round, looking at sales and customer retention in the context of raw materials, staffing, property, facilities management and energy. Indeed, competition in the sector will not ease, even if some of the minor players do fall out of the game. That demands planning for the long-term. Cost cutting alone will not suffice – organisations must plan for a leaner, more efficient future, but one where the underlying market demand remains strong, and leading players will still flourish.