Whichever way individuals voted in the EU referendum and whatever they feel about the outcome, we can all agree that chefs and operators would be wise to start planning for some turbulent times ahead in terms of the price they pay for food, drink and many other essential goods and services.
As we said in relation to our recent Market Forecast, “both the City and the supply chain thrive on certainty.” However, it looks as though uncertainty is going to dominate the market for some time to come.
In the aftermath of the vote to leave, reaction from both the food and hospitality industry was as mixed as it was everywhere in the country:
Ian Wright CBE, director general at the Food and Drink Federation, said it had surveyed members before the referendum and found 70% in favour of staying, He added, “the majority of FDF members will regard this as a disappointing result for the food and drink industry.”
Representing Britain’s farmers, NFU President Meurig Raymond said, “we will be looking for guarantees that the support given to our farmers is equal to that given to farmers in the EU, who will still be our principal competitors. We will want to see a rural development policy which focuses on enhancing our competitiveness.”
Understandably, JD Wetherspoon boss Tim Martin, a prominent pro-Brexit campaigner, welcomed the result and insisted, “anxiety about the economic effects of independence during the campaign was misplaced. The UK will thrive as an independent country, making its own laws, and we will work with our good friends and neighbours in Europe and elsewhere to ensure a positive outcome for all parties.”
Ufi Ibrahim, CEO of the British Hospitality Association, said: “Hospitality and tourism benefits from a flourishing economy and any level of uncertainty will have an impact. The United Kingdom’s withdrawal from the European Union is the beginning of a process which could take years.
“As we go through this process, the BHA will call upon every politician in this country to do all they can to guard the strong reputation that our industry has built representing a hospitable and welcoming country all around the world. Our industry is one of the key drivers of exports, prosperity and the fourth largest employer supporting 4.5 million jobs.”
Industry analyst Horizons said that while the uncertainty will be particularly intense over the next few weeks, operators needed to be ready for this insecurity to last for “five years or so as Britain finds its new way in the world.”
Horizons added: “The foodservice sector will be less buoyant than it would have otherwise been – but the effects will be felt differently in different sectors,” adding that while there may be more foreign tourists because of the fall in sterling, the industry will also have to learn to live with higher import costs for the same reason.
At Lynx Purchasing, our own initial conversations with suppliers have flagged up the same concerns. Many commodities, such as bananas and avocados, are traded in dollars, and so a weaker pound has an immediate impact on the price importers, wholesalers and ultimately operators pay. Cooking oil is one such commodity, with our supplier reporting a 7-8% increase in the price as sterling fell.
As a nation, we also import a great deal of produce from elsewhere in Europe, including many fruit and salad lines, along with pork. The fall in sterling against the euro will have a clear impact on these goods.
However uncertain the situation, though, there are steps that operators can take immediately to mitigate the impact on their business. These include:
- Buy British – Using produce from British suppliers ensures that the price stays constant whatever is happening on the currency markets. Fresh produce, bought in season, is often the best value and also has a strong customer appeal when promoted on menu.
- Use the specials board – availability on different cuts of fish and meat changes frequently. Work with suppliers to make the most of high quality produce, and build in enough menu flexibility to feature specials on a daily or weekly basis. Flexible menu descriptions, such as ‘fish & chips made with freshly-battered catch of the day’; ‘Sunday roast with this week’s chef-selected cut’ and ‘served with fresh, seasonal vegetables’ enable operators to make the most of deals from suppliers.
- Reduce food waste – make use of suppliers’ skills. For example, a catering butcher can not only cut steaks to size, but can use the beef trim to make burgers and pies. Any extra cost of asking a supplier to do this work should be balanced against both kitchen time saved and the increased yield.
- Count the cost – set a target GP on specials and core menu dishes, and monitor costs carefully. Our free GP Calculator App, endorsed by the Craft Guild of Chefs, helps chefs to monitor margins, particularly specials, using their smartphone or tablet in a busy kitchen. You can download the app from the App Store or Google Play, using the links below:
For Android: Lynx Purchasing GP Calculator App on Google Play
The reality is that nobody can predict what comes next. The markets may settle down reasonably quickly, or we may be facing an extended period of uncertainty before whatever new trading agreements may be negotiated come into effect. Whatever happens, we’ll continue to act as a bridge between suppliers and caterers to ensure our customers get access to the products that meet their needs at the best prices.