The growing cost of equipping kitchens and securing new sites is forcing restaurant chains such as Leon to work more smartly, the boss of the healthy fast food chain has said.
John Upton, who joined Leon last year from McDonald’s, said there was no doubt that operators are facing enormous cost pressures from all sides and need to meet the challenge head on.
“We are seeing inflation right across the board,” he said. “And frankly we are just working really hard with suppliers to reduce that as far as possible — it is not just bits of kit, it is obviously labour as well because labour is part of building a kitchen. So you’ve got a range of inflationary pressures there of labour, hardware, food — raw ingredients — rent, the Living Wage. So it is not just one factor.”
He added: “We are facing a lot of cost and we are having to work smartly to deal with it. The fact that we are growing is obviously helpful because the more volume we can talk about in terms of units.”
Many catering equipment suppliers have increased their prices going into the New Year, meaning that kit can cost anything between 3% and 12% more expensive to purchase than it did this time last year.
Additionally, buying specialist Lynx Purchasing warned this week of the disastrous effect that recent food inflation could have on UK restaurant businesses over the next few months.
Meanwhile, in London, where the bulk of Leon’s portfolio is based, the spectre of forthcoming hikes in business rates is adding extra unwanted pressure. Mr Upton insists the chain still regards the capital as “very much a growth market” but pulled no punches in describing the potential headache that the increases present.
“The rates increases are really bad for a small, growing business. They are significant and they are adding hundreds of thousands of pounds to our cost base. And along with the euro exchange rate versus the pound post Brexit, we as a small business are facing massive and significant inflationary costs. But London remains a target market for us and we do hope that the rental market calms down because rents are still massive and it costs a lot of money per year to get sites.”
The full interview with John Upton can be seen in the January issue of Foodservice Equipment Journal.