By Mike James, Contributor Writer
How will the golden age of eating out weather the Brexit storm? One study predicts that 20% of restaurants are at risk of going bust as a direct result of Brexit. As sales drop and costs rise, the Guardian reports that the number of restaurants in the UK has fallen for the first time in eight years. On average, two restaurants a week have closed in the year to the end of March. The future isn’t looking exactly rosy for UK restaurateurs.
High profile closures as large chains slim down include the closure of 20 sites by troubled burger outlet Byron. Jamie Oliver is closing 12 of his 37 Jamie’s Italian branches, despite having pumped £3 million of his own money into the business. Intense competition and rising costs, partly as a result of Brexit, are to blame. Carluccio’s, the Prezzo Group and Sir Terence Conran’s Albion Restaurants are all also undergoing restructuring.
Rising food costs, the slump in the pound, economic uncertainty and access to staff are pressures not likely to go away as Brexit wobbles towards what many businesses hope will be some kind of deal. With uncertainty likely to be sticking around for some time, how do small-scale restaurants plan ahead to survive? Here are six things small restaurants should be seriously thinking about.
Efficiency Savings
Keeping costs under control is the key to improving profitability. Half of Britain’s food is imported from the EU, but until a Brexit deal is struck, the full implication for restaurants importing costs are unknown.
Financial technology company for small businesses, iZettle, recommend hospitality businesses use tech to simplify information flows and drive efficiency. Their recommendations include:
No lock-in contracts for POS systems
Simplify information across touchpoints
Integrate staff and inventory management
In addition, getting staffing levels spot on is something worth striving for. Having employees standing around in quiet periods or having guests leave because of understaffing will have an impact on profitability.
Increase Initiatives to Attract UK Workers
A recent report in The Observer claims that eating out is under threat due to a shortage of trained chefs and waiters. It’s a problem compounded by Brexit. Last year research by the British Hospitality Association and KPMG found the hospitality sector will be staring into a recruitment black hole without the free movement of EU nationals. By 2029, the industry could have a deficit of more than a million workers.
Small restaurants who have typically relied upon EU workers need to start looking at other ways to attract more UK workers. In order to nurture the next generation of employees, small businesses need to develop relationships with community groups and local schools. One accountancy firm recommends restaurants set up a plan for recruiting staff after Brexit by:
Inviting schools’ careers advisers to a meal and let them see what potential work is available
Offering Saturday cooking clubs for local kids
Offering work experience programmes to increase understanding of opportunities
Engage in an apprenticeship scheme
Find innovative ways to encourage, motivate and develop young people
Connect with charities finding work for ex-offenders and people returning to work after a period of crisis
Improve Employee Loyalty
Brexit is likely to make it harder to find and retain staff. Employee engagement initiatives, training and professional development are the things businesses in the hospitality industry should be focusing on to retain staff.
Offer More Flexible Working Hours
Improving work-life balance is something all businesses should be looking at to improve the efficiency, motivation and commitment of their employees. The hospitality industry is renowned for its unsocial hours, but providing staff with flexibility and more control over when they work will differentiate good employers from poor ones.
Employees should be given flexibility regarding time off for medical appointments or family issues. Employees who are given the flexibility to balance shifts with studies, childcare or taking care of relatives are more likely to stay.
Recognise & Celebrate Success
We all need recognition and approval. It is what motivates us. Employees who receive recognition are much more likely to go above and beyond when engaging with your diners. Satisfied and engaged employees will bring a positive energy to the workplace and guests will notice this. Employees need to feel appreciated. Set up an “employee of the month” scheme or reward employees who show great initiative.
Set Up a Tronc Scheme for Distribution of Tips
The UK government has developed a voluntary code of best practice on tips and gratuities in the hospitality sector. As restaurateurs struggle with weak consumer spending and a higher minimum wage, some have asked restaurant staff to hand over some or all of their tips. This isn’t best practice and will certainly contribute to disgruntled employees, which won’t help staff retention.
A Tronc scheme is a system used to distribute tips and gratuities to employees and offers significant benefits to employers and staff through long-standing tax reliefs. A Tronc can increase employees’ take-home pay at no cost to the business.
With the threat of Brexit, the key for small restaurant survival is to keep calm, review food chain suppliers, build a team from within and stay ahead of the game by adapting to industry changes. A flexible and positive approach is essential.
About the Author
Mike James is a Brighton based writer, specialising in a few small business niches. From cyber security to online branding, Mike has written for a range of the leading online and print magazines over a 20+ year career. When he's not writing tech and geeky stuff, he loves to write about cookery and exercise regimes; fields he is anything but an expert in.
