Greene King’s takeover of Spirit edged further closer this week, with the UK competition authority saying that while the deal will be referred for investigation, it is satisfied that in the vast majority of areas there is no conflict.
With M&B acquiring Orchid last year, and some of the smaller and mid-sized pub operators joining forces, few sectors of the market have witnessed such fervent consolidation activity.
But the question on the catering equipment industry’s lips is ‘what is it going to mean for buying behaviour?’
“Pub groups will continue to buy other successful pub groups and time will tell, in my opinion, if this is positive for our industry,” says Laura Abbott, business development manager at Electrolux Professional. “Any large groups looking to consolidate their supply routes can only benefit from working with a manufacturer or supplier that can provide multiple products rather than specialising in one area in particular.
“Of course, there will still be that need for manufacturers to prove that their equipment is value for money, which is where those that can offer added-value ranging from quick delivery of products to bespoke staff training programmes will be the most successful.”
Mark Hogan, marketing manager of Foodservice Equipment Marketing (FEM), thinks the prospect of the bigger pub groups combining operations will be enough to prevent any complacency creeping into the supply chain.
“The consolidation is a positive thing as it will enable standardisation of operation. The groups can introduce practices and equipment that have been successful within their operations, which will lead to greater efficiency and drive to find the best piece of catering equipment for the job.”
However, other commentators don’t possess such a welcoming stance towards consolidation, arguing that it will simply drive down prices and erode margins for suppliers of catering equipment.
Karl Marriott, director of Marlin Catering Solutions, agrees that it could encourage behaviour which suppliers ultimately aim to avoid. “It puts more pressure on equipment suppliers, both dealers and manufacturers, as some of the larger groups are using the bigger contracts to drive down margins on equipment purchases. It would probably be better for suppliers if the big groups decide to split their estates into divisions that will have autonomy to purchase and service their pubs.”
Cooking suite and induction specialist Grande Cuisine says its experience is that larger groups don’t invest in higher specified products, with their planning and outfitting teams instead choosing to pass the costs onto the operations teams.
Consequently, managing director, Steve Hobbs, believes consolidation will only exacerbate this scenario. “The larger groups streamline their operations, leading to less diversity — which a focus being placed on lowering start-up costs through lower quality equipment and bulk orders, with less of a strategy of decreasing lifetime costs and energy use.”