New report reveals operating costs have passed the 50% mark for hospitality sector
Posted in Licensing | July 12, 2017 | by Dadds LLP Solicitors
A new report published by the ALMR and Christie & Co highlighting the challenges and opportunities for pubs and restaurants over the coming months, reveals that operating costs have risen above 50% of turnover for the first time.
The ALMR Christie & Co Benchmarking Report examines operating costs, market trends and sector performance for the hospitality sector. The latest edition reveals increased operating costs, tightening margins for the industry and the need for clarity over Brexit.
The 2017 report shows growth across the sector continuing to slow with operating costs across all trading styles standing at 51.5% of turnover - the first time in the survey’s history the 50% mark has been passed.
However, the survey also highlights flourishing areas, with licensed accommodation growing at 5.1%; and nightclubs experiencing a resurgence, with 3.6% growth.
New for the 2017, the report includes a confidence survey, with respondents reporting that they largely felt confident about the year ahead. Respondents said they anticipated 2017 to be a profitable year, and the majority believed that Brexit would have little impact on their business in 2017.
ALMR Chief Executive Kate Nicholls said: “Employers are looking at the political instability and uncertainty caused by Brexit and the possibility of significant cost increases, as wages rise and rates reliefs expire. There is a risk that additional costs could hit at a time of great instability hitting eating and drinking out businesses that are crucial to the UK economy and have helped restore prosperity to our town and city centres.”
Neil Morgan, Managing Director of Pubs & Restaurants at Christie & Co, adds, “Despite the well-documented decline in pub numbers over the past three decades we are seeing a more lean and competitive sector emerging as operators diversify and respond to the continuing evolution of the UK consumer landscape.
There is clearly confidence in the sector, highlighted by the Report’s confidence survey and increasing levels of capital expenditure, however there are a number of political and economic pressures which could threaten some operators, all exacerbated by the uncertainty surrounding the Brexit negotiations. What is clear is that operators must prepare for both the challenges and opportunities; therefore the need for effective business planning is more essential than ever if operators are to not merely weather the storm but seek to thrive in the long term.”
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