Out vote means more diners set to stay in
Brexit hits bars and restaurants as owners see fall in trade and fear downturn in confidence
OWNERS of restaurants and bars are overwhelmingly pessimistic following the European referendum result, according to research seen exclusively by The Mail on Sunday.
The study revealed fears of a decline in consumer spending, as diners stay at home, leading to cuts in investment, compounded by staffing problems caused by Brexit.
A survey of 800 leading business owners and directors in the sector by consultants CGA Peach revealed that just 15 per cent of operators were optimistic about the market for the next six months, much lower than the 75 per cent who were optimistic at the start of the year.
John Vincent, co-founder of Leon Restaurants, told The Mail on Sunday that he had a ‘very demoralised team who think they are not welcome in Britain any more’, adding: ‘We have some remarkable young people who are feeling really down and unwanted right now.’
Vincent, who together with Leon co-founder Henry Dimbleby has advised the Government on its healthy eating initiatives, said business was already 3 per cent down on what it would have been had the referendum vote gone the other way, and said the chain had already been hit by the fall in exchange rates.
‘We’re going to look at more overseas investment,’ he said. ‘We’ve just opened in Schiphol, Amsterdam’s airport, and if it’s going to be more difficult here, then why not?’
Nearly two-thirds of those surveyed believed Brexit would have a negative effect on their business.
In the longer term the picture was a little brighter, but only just. Some 29 per cent of operators are optimistic about the market as a whole over the next two years. Tellingly, not a single operator raised their expectations, either in the short or long term, after the referendum.
‘Confidence has plummeted since the beginning of this year,’ said Peter Martin, vice president of CGA Peach. ‘You’ve got the falling pound, falling customer confidence, potentially higher costs – Italian restaurants who source food from Italy, for example – and there will be much greater competitive pressure. There will certainly be casualties in the industry, maybe among companies who are over-leveraged or who can’t crunch their costs. There could also be more consolidation.’
While there is expected to be less investment in the industry by operators, one silver lining could be that property rental prices, a major cost for restaurants and bars, could fall.
‘However in the long term there is huge concern about overseas labour,’ said Martin. ‘In the sector there are a lot of good people from the Euro- pean Union who will be concerned about what’s going to happen to them. And even if people are allowed to stay here, what about companies trying to recruit in the future?’
Last week it was reported that restaurant tycoon Richard Caring told foreign members of staff that he would fight ‘tooth and nail’ to protect their rights following the ‘absurd’ Brexit vote.
Caring, who owns top London restaurants The Ivy, Sexy Fish and Le Caprice, reputedly told staff they should have ‘no concerns’ about staying in the country after the UK voted to leave the European Union.
While the economic climate might be tough for businesses, diners may benefit as there will be increased competition in the sector, said Martin, adding: ‘People will probably spend less and companies will have to be very entrepreneurial and innovative to attract customers.’
The winners from the Brexit vote are foreign visitors, who are finding their travel cash goes a lot further. While restaurateurs are pessimistic for the industry as a whole, those in tourist hotspots have seen customer numbers rise.
James Breslaw, founder and owner of the Neds NoodleBar chain, said: ‘Business is already up 14 per cent at our London Eye restaurant. It’s phenomenal. Tourists who wouldn’t have ordered drinks or starters before are ordering the lot. They’ve got much more money.’
However, his food costs have already gone up, which he says ‘goes straight off my gross profit’. And staff at Neds, 95 per cent of whom are from overseas, are worried. He said: ‘Nobody knows what’s going to happen. As a business you’ve just got to get on with it.’
Peter Martin adds: ‘Whether we wanted to be here or not – here we are. It is a challenging time for the industry, but it’s an exciting time.’