Brexit weighing heavy on QSRs and full-service operators, report claims

KNUTSFORD, UNITED KINGDOM - JUNE 24:  A European Union flag, with a hole cut in the middle, flies at half-mast outside a home in Knutsford Cheshire after today's historic referendum on June 24, 2016 in Knutsford, United Kingdom. The results from the historic EU referendum has now been declared and the United Kingdom has voted to LEAVE the European Union.  (Photo by Christopher Furlong/Getty Images)

The growth of the UK out of home foodservice market has slowed since the Brexit referendum one year ago, a new report has said.

Restaurant visits after the referendum were still growing but at a slower rate that the period before the Brexit vote.

Notably, visits to quick-service restaurants (QSR) slipped marginally. The sector registered pre-referendum visit growth of 2.2% but this has now fallen to 1.9%, according to the NPD Group’s data.

Meanwhile, full-service restaurants – the most expensive foodservice channel – have seen the most noticeable slowdown from 3% down to 2%.

Cyril Lavenant, foodservice director at the NPD Group, admitted that the British foodservice market has slowed since the Brexit referendum but insisted that there is still growth and the industry is currently showing resilience.

This is because operators have spent the past 10 years since the last downturn creating a lively and appealing foodservice environment that encourages consumers to keep eating out,” he said.

Lavenant added: “However, there are big challenges ahead. The weakness of sterling means foodservice operators will have to replace global sourcing with local sourcing while ensuring they still get the quality they need. Inflation will prompt consumers to make savings and so we expect it to dampen demand for eating out.

“Tighter immigration rules will make it harder for operators to hire staff. This is a huge issue in an industry where around 20% of employees are not from the UK. Even if a work-visa system operates when the UK leaves the EU, hiring EU staff would still be more difficult because it will absorb time and create costs. Any sustained staff shortage would damage Britain’s foodservice sector.”

The report found that consumers have started to drop the more expensive dinner occasion, which is down nearly 3% in visit terms, although breakfast and lunch appear to be taking up the slack with faster growth since the referendum than before.

But contrary to the trend seen in the recession that began end of 2007, visits not involving a deal or promotion are still growing faster than promoted visits. This is a clear indication consumers feel they are getting good value for money from British foodservice operators, the report said.

It added though, that the perception of value might change if operators introduce large price increases to cope with strong inflation. Operators will have to maintain a very appealing experience combining great service, as well as high quality of food and drinks to mitigate the negative impact of higher prices.

But the ALMR has welcomed Theresa May’s statement yesterday, in which she set out plans for migration upon Brexit saying that she didn’t want anyone working in Britain to leave. Chief executive Kate Nicholls said: “the Prime Minister’s statement is a welcome indication that the Government recognises the value of EU workers to the UK economy, and that a sensible solution will prevail.”

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