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Report finds operating costs now account for over 50% of turnover

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Report finds operating costs now account for over 50% of turnover

Operating costs in the licensed sector now stand at over 50% of turnover, according to a new report on performance in the pub and restaurant market.

The ALMR Christie & Co Benchmarking Report has found that despite there being confidence in the sector, with rising costs to contend with, operators are keen for support from the Government in the form of access to labour.

Some 55 companies were surveyed, covering a total of 5,604 outlets, and reported that at 51.5% operating costs were at their highest rate against turnover since the report was launched in 2007.

The survey also found that licensed accommodation was growing at 5.1% as operators look to diversify. Meanwhile, capital expenditure stands at pre-recession levels with growth opportunities afforded by the amount of private equity backing in the sector.

This year a confidence survey has been introduced, with the majority of respondents predicting like-for-like turnover growth and anticipating little impact as a result of Brexit.

ALMR chief executive Kate Nicholls said: “Employers are looking at the political instability and uncertainty caused by Brexit and the possibility of significant cost increases, as wages rise and rates reliefs expire. There is a risk that additional costs could hit at a time of great instability, hitting eating and drinking out businesses that are crucial to the UK economy and have helped restore prosperity to our town and city centres.”

She added that venues were adapting to the changing environment and, given the right conditions, were still well placed to thrive.

“It should be remembered though, that this growth could be undermined if the Government does not provide adequate support for businesses and fails to bring about the stability and access to labour that employers are going to need,” Nicholls added.

Neil Morgan, managing director – pubs and restaurants at Christie & Co, said that the benchmarking report was evidence of a lean and competitive sector emerging from a period of consolidation.

He added: “There is clearly confidence in the sector, highlighted by the Report’s confidence survey and increasing levels of capital expenditure, however there are a number of political and economic pressures which could threaten some operators, all exacerbated by the uncertainty surrounding the Brexit negotiations.”

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