Fewer catering operators cutting costs

Business confidence continues to grow in the UK’s foodservice sector, with more than two-thirds of operators reporting an increase in year-on-year.

Around a half of the companies polled by research house Horizons said they are serving more meals at the weekend than they did this time last year, while 26% reported a “large increase”.

According to the company’s latest ‘Eating Out-Look’ survey, fewer operators are taking cost-cutting actions in 2014 compared with 2013, and a significant proportion of businesses have increased staff numbers (28%), with fewer having to cut staff hours or freeze wages.

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“This is a really encouraging result and one that reassures us that recovery in the hospitality sector is well underway,” said Emma Read, Horizons’ director of marketing and business development.

“Our last operator survey [May 2014] showed that businesses were much more optimistic about future trading, with a third expecting increases in food sales. Six months on their optimism has been proved correct, with the majority of respondents reporting an actual rise in food and drink sales and confidence in the sector even higher.”

The report, which surveys 300 businesses across the market, including hotel, restaurant, pub and quick service operators, also reveals that fewer customers are trading down to lower priced meals (22% this autumn compared with 33% last year).

At the same time operators report that the number of customers purchasing food using meal deals or promotions has dropped to 34%, compared with 41% a year ago.

In line with this, operators’ perception of average spend per head has increased significantly in 2014 with the number of consumers spending £12-£16 rising from 12% to 18% and the proportion of customers spending an average of £6-£12 dropping from 24% to 21%.

“While this indicates that fewer meals deals and promotional offers are available, it also reflects the fact that the consumer mindset is starting to change,” added Read. “No longer is price as paramount as it once was — consumer confidence is returning and with that comes a new willingness amongst diners to treat themselves to a meal out without worrying quite so much about the cost.”

“A decline in mentions of cost reducing actions illustrates operators’ new-found confidence, as previous surveys have revealed that menu changes and re-negotiation of supplier contracts have been key ways for operators to keep their costs down.”

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