The effects of Brexit on the UK hospitality industry — trends, fears & alternatives

The effects of Brexit on the UK hospitality industry — trends, fears & alternatives

Brexit has been sending chills down the spine of restauranteers ever since the UK imprudently decided against inclusion in the EU. With so much uncertainty surrounding the hospitality industry, there are factors that pose a huge threat to the livelihood of restaurants who have thrived over the last few years. These include property price inflation, a weak pound in the currency market, and the upward cost of ingredients which are traded on the international market. And although it’s really not pretty, it’s important that we hope for the best and expect the worst in the new landscape.Business plan

According to KMPG, approximately 25% of the 3 million-strong hospitality workforce are EU nationals. That’s a quarter of workers in bars, restaurants and cafes who are at risk of being out of work once the perils of Brexit finally set in. Of that, 75% of waiting staff and 25% of chefs are EU nationals an industry which is heavily reliant on EU workers. By the time we experience the full effect of Brexit, the requirements of the workforce may be alleviated to some extent by automation and technology, however, this is far from a long-term solution. As the fourth-biggest employer for the England, what does this mean for the hospitality industry? Instead of crying over spilt milk, it’s important to highlight the biggest changes and prepare to embrace the changes of what your brand looks like post-Brexit.

Short-term resolutions?

With major changes expected, industry leaders are deep in thought. Migration Watch UK, for example, advocate the use of Barista Visas for EU nationals leaving the country. Critics of the scheme highlight the obstacles of potential career progression and building a life for young workers, who under the scheme are only allowed to work in the UK for up to 24 months and are not entitled to any benefits or educational opportunities whilst in work. Ultimately, a disincentivising short-term answer to a long-term problem.

Recruitment & government efforts

A more robust method of managing the potential shortage of UK-based workers in hospitality is to attract more Brits to work. Why? Because they provide the security of employability at a time where Brexit threatens the industry with huge shortfalls in staff numbers. There are various sectors to source this workforce from — the unemployed, the economically inactive and workers from other UK sectors that might consider unskilled roles in hospitality. At the moment, there is simply not enough being done to encourage the unemployed to fill recruitment needs. What we find today is not enough unemployed workers in the right places to fill the future recruitment needs that would be generated by a complete exodus of EU migrants in the UK hospitality sector.

The government has also announced new T-Level qualifications for catering and hospitality for 16-19-year-olds. This was implemented in the hope that, once in place, this will encourage the growth of more workers trained in hospitality; an attempt to replace the extra 260,000 vacancies that the industry needs to fill year-on-year.

Building from within

One trend that all independent retailers can learn from is the internal investment of workers. Whilst businesses still have employees at their disposal, providing training and employment programmes incentivises both current and prospective workers, and is one of the many tools that can be employed to attract talent, including chefs, waiting staff and managers. Something that is fundamental to the success of your workforce.

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Keep calm and carry on

As we stare into the abyss, it may be hard to see beyond the impending doom, but looking past this fear will allow businesses to focus on creating a future-proof workforce. It is equally important to carry a ‘day-by-day’ mentality as we learn the true extent of Brexit over the next few years. Rome was not built in a day, and likewise, the effects of Brexit will not hit us overnight. This provides us with the ability to plan a few years in advance.

Staying ahead of the game

Staying on top of market trends are key to understanding how others adapt to industry changes, so it’s beneficial to keep an eye on the measures employed by larger brands, industry leaders and competitors to tackle the post-Brexit hospitality industry. Without this, you run the risk of not preparing for all possibilities. Secrets to success may lie outside the immediate realm of service — not so much with food, ingredients and styles, but rather within the restaurant experience. So far, small to medium restaurants have been the industry’s current success story and can use their flexible approach to strategy to carve out a gap in the market once the dust settles.  

It is an unrealistic expectation to avoid the impact of Brexit in terms of the cost of managing the business. With this in mind, it’s about deciding how much of this added pressure will be passed onto consumers; too much and you risk losing business, too little and you lose the new margins set in place by Brexit.

The hospitality sector will need time to address the proposed recruitment gap, and your business will need time to build a business strategy for survival, so prepare for days ahead… winter is coming.