Following the coalition Government's long-expected, but no less severe, cuts to public spending last week, hospitality operators are predicting a torrid few months ahead with seasonal cheer likely to be in short supply.
Exclusive research conducted for Caterer, in association with Kenco, reveals that with predictions of up to 500,000 public sector job losses and significantly reduced budgets, businesses are continuing to scrutinise their costs and look at ways to keep frugal consumers spending.
Last year's key challenges for hospitality operators were, in order of importance, managing costs (48%), reduced consumer spending (36%) and the global economic recession (35%).
With the UK now, technically at least, out of recession, the economic slowdown has slipped down the order of importance with a quarter (25%) of respondents flagging it up as a concern, perhaps still nervous of a suggested "double-dip" recession.
The key challenges, therefore, for the next year are, in order of importance, managing costs (41%), reduced consumer spending (33%), effective pricing strategy (29%), marketing (28%), attracting good employees (27%) and keeping hold of them (26%).
Compared with last year, the key challenges list is largely unchanged, although given the increasingly fierce battle for the public pound, marketing has climbed from seventh place a year ago to fourth place for the coming year.
With the Government's CRC Efficiency Scheme U-turn this week stunning the hospitality industry, it is perhaps no surprise that in tough times making your business environmentally friendly is deemed optional for many, with building green credentials second to last on the list of this year's challenges with 19%, just ahead of securing finance (16%).
It represents an improvement of sorts, with building green credentials ranking in last place with 13% a year ago, but shows that despite the business case made for going green, many do not believe it will help them prosper in tough times.
In regards to the main issues affecting the hospitality industry at large, the skills crisis and dealing with food regulation are the top concerns.
Although there are dark clouds gathering over the sector's future performance, the majority of the survey's respondents have either maintained their turnover and profitability in the past year or seen growth.
Asked how turnover compared with the same time 12 months' back, nearly half (47%) said it had grown and, despite increases in staff and food costs, profitability had improved for 42%.
However, turnover was flat for 26% of operators and profitability has been maintained at the same level for 29%, suggesting that recovery is at best uneven with some businesses and regions outperforming others. About 20% of respondents said turnover and profitability had declined compared with last year, clearly showing times remain tough for many.
Despite this, the research found a strong vein of positivity within the sector with 67% of those surveyed either fairly positive or very positive about the coming year.
Susan Nash, communications manager at Kraft Foods, parent company of Kenco Coffee, said there was a sense of optimism in the industry. "This research shows that, with careful management and a keen eye on costs, operators continue to attract an ever more prudent consumer."
She added: "It is reassuring that there is a strong sense of positivity and that, despite the obvious economic challenges, operators remain dedicated to creating environmentally sustainable businesses."
The Trends in Catering Survey was conducted by Reed Business Insight between 16 August and 23 September 2010 and received almost 350 responses nationwide from hospitality professionals.
ACTIONS TAKEN IN PAST YEAR
Cut operating costs (55%)
Changed offering (35%)
Target fresh market sectors (35%)
Reduce prices (31%)
Lay-off staff (30%)