According to data released by the Association of Licensed Multiple Retailers, bars pubs and restaurant chains throughout the United Kingdom are pulling back on expansion and even face potential closure, another roll-on effect of the Brexit decision in June 2016. Food price inflation is sitting at around ten percent with drinks costs rising by seven percent, a result of the devaluing of the pound as the UK prepares to leave the European Economic Community.
“There is a real reluctance to increase prices to the consumer for fear of damaging fragile discretionary spend,” said Kate Nicholls, chief executive of the ALMR. “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.”
Furthermore, impending immigration restrictions will affect the hospitality workforce, up to 70 per cent of whom in London come from overseas. Also having an impact is the introduction of a National Living Wage for workers aged 25 and over, further cutting into restaurant margins.
Before the Brexit vote, internal surveys showed that 84 per cent of ALMR members were optimistic about their business – a number which has dropped to 47 percent in the last 12 months. As Britain begins exit negotiations, it is becoming increasingly difficult for chains backed by foreign equity to make plans for the future.