The annual Arena Savoy Lecture is a highlight of the foodservice calendar and as the leading foodservice agency we dusted off our gladrags and headed up to town to join the great and the good of the industry.
The evening kicked-off with a market overview from James Walton Chief Economist at IGD. Key takeouts included:
- The foodservice bounce back post-pandemic has been quicker than expected (although this is skewed by inflation)
- Consumer financial confidence is up slightly compared to this time last year (although still hit by the cost-of-living crisis)
- Despite consumers saying they are likely to cut back on eating out (possibly the first thing that comes to mind) they are still doing it, all be it less often but spending more as they value the experience
- London is lagging behind the rest of the UK as tourism numbers are yet to fully return and hybrid working has hit footfall
- Margins are being squeezed razor thin for operators
- As far as the supply chain post-Brexit there are positives with the Winsor Framework for Northern Ireland and proposed TOM (Target Operating Model) – which may help to counteract previous uncertainty
- The war in Ukraine and energy price hikes have impacted consumer disposable incomes as energy bills rocket and food & drink prices soar with inflation
- Whilst foodservice operators have also been hit with extreme energy bills and food inflation
- Energy prices have likely peaked, which should help with inflation but there is a lag before it will filter through
- OBR predicts that by the end of 2024 the UK should be back to 2% inflation, although we are unlikely to see any deflation so the cost of living will remain high
- Household prosperity moving forward will be driven by increased income from wages, taxes and benefits with disposable income predicted to be back to pre-Ukraine levels by 2027
- Food price inflation is peaking and will slowly come down
- We have seen margin compression with 82% of food manufacturers absorbing rising costs as the only ones in the supply chain with any slack
- Retailers have been able to pass on costs to consumers, but with eating out considered a discretionary spend, foodservice operators are more reticent to pass on increased costs for fear of losing business
- Retailers have also dropped underperforming lines, with 1,000s to choose from they have the flexibility many foodservice operators don’t have (e.g. a burger restaurant can’t just stop serving burgers)
- We need to invest in food to serve, people to deliver and resource efficiency
- Sustainability needs to be a key priority for the industry with investment today to secure the longer term
Then it was on to the panel discussion, which sadly Kate Nicolls OBE, CEO of UK Hospitality couldn’t attend due to an important government meeting (a very good excuse) but luckily for us James Bielby Chef Exec of FWD stepped in and was joined by Wendy Bartlett, MBE Founder of BM Caterers and Paul Nieduszynski, Chief Commercial Officer of Sysco GB. The discussion touched on a wide range of industry topics with both wholesaler and operator perspectives represented. Some of the key takeouts included:
- The Industry is very resilient. There has always been and always will be challenges for us to deal with.
- The pandemic gave hospitality a seat at the table with the government, but as a sector it is not understood or taken as seriously as others
- The government does not understand the implications of legislation such as allergens and calorie labelling, and what this means for operators day-to-day
- The impact of Brexit and the current cost of living crisis means the UK is no longer as attractive as it used to be as regards the labour pool. With high rents and high cost of travel, met by wages that can’t keep up, staff are either moving back home to other countries or out of the sector
- Foodservices businesses are trying to make employment packages more attractive with surround benefits (free meals, discounts with partner brands etc) to attract and help retain staff
- Operators are facing inflation, high energy prices, high interest rates creating expensive borrowing, labour shortages and a weak pound – it’s tough!
- This is resulting in buying ‘just in time’ to reduce stock holding and buying less, switching to own label, opting for labour saving options, offering smaller menus, menu engineering and seeing massively squeezed margins
- Despite this, operators are having to deliver a quality offer for customers to part with their hard-earned cash and have upped their game to stay in business post-pandemic
- Wholesalers are offering operators more than a delivery service, with advice on trends and innovations, development chef teams, business insights and more.
- The market is polarised with QSR low ticket and higher-end experience-led operators doing far better than the squeezed middle ground
- B&I is seeing people order more hot food and treating themselves in the office, whilst employers are seeing the value of offering a strong food offer to tempt people back to the office and drive loyalty
- More focus is needed to develop a robust food strategy for the UK. Henry Dimbleby in fact resigned as the suggestions in his report have been largely ignored
- Ideally the industry would like to see some more intervention to help businesses with energy costs, more funding to help foodservice become an attractive career path and recognition that foodservice is vital to the country and the economy’s survival rather than putting supermarkets first
- Obesity is an issue but anecdotally calorie labelling doesn’t seem to change habits, so we need to educate children and form good eating habits as early as possible in schools and at home
- Sustainability is an issue that needs to return to the fore
With the world set to rights it was onto the serious business of networking with some bubbles at the drinks and canape reception. It was great to catch-up with contacts old and new and soon we were ushered into the ballroom for the lavish dinner from the Savoy, which didn’t disappoint. As the wine and conversation flowed there was also time to remember Naomi Arnold, founder of Arena who sadly passed away recently and who I recall as a force of nature from my early days in the industry. On a happier note, Dr. Andy Kemp MBE was honoured with a well-deserved lifetime achievement award to a standing ovation from the room. Throw in a raffle for Hospitality Action and Springboardand our Monday evening was complete. Well done to Lorraine and the team at Arena on another fabulous event, here’s to the next one!