The boss of one of the fastest-growing pub and restaurant chains in the UK has warned there will be a “significant slowing” of investment from the industry if the cost of items such as catering equipment keep increasing.
Peter Borg-Neal, CEO of Oakman Inns & Restaurants, said an increase in capital expenditure costs, including new kitchen equipment, over the past 12 months has had the “biggest impact” on its business.
The vast majority of catering equipment suppliers have tweaked their prices since last summer’s EU referendum as they’ve wrestled with the fall-out of huge currency volatility. Even UK-based manufacturers have been exposed to such challenges as many purchase components or steel from overseas.
Mr Borg-Neal warned this week that there was only so much that operators could take.
“The key challenge we are experiencing is the increase in input prices driven by sterling weakness. We have seen a large increase in food prices whilst being very wary of passing them on to the consumer. However, the biggest impact on us is being seen in our capital expenditure costs.
“Items such as kitchen equipment and building materials have increased dramatically. When this is set against some of the other challenges to our trading it seems to us very likely that, without government intervention, there will be a significant slowing of investment in our industry.”
While Oakman has had to contend with the cost of kitchen projects increasing, it has made an impressive attempt of balancing the books. Like-for-like sales during the first half of its current fiscal year, which spans the six months to 1 October, grew 27% to £13.5m.
“We are absolutely delighted with our performance over the first half of the year and we have a real sense of momentum as we approach the vital Christmas trading period,” Mr Peter Borg-Neal said.
“The recent acquisition of The Anchor in Hullbridge and the reopening of The Betsey Wynne have added to that momentum – both are trading ahead of expectation. We are now on-site at the Beech House, Amersham, The Cherry Tree, Olney and The Royal Foresters, Ascot – all of which will open in the first half of 2018.”
‘The Oakman Collection’ comprises 20 contemporary Inns with letting rooms and ‘all-day’ pubs across Berkshire, Bedfordshire, Buckinghamshire, Essex, Hertfordshire, Northamptonshire, Oxfordshire, Warwickshire and the West Midlands.