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Cutting food waste can help thousands of restaurant businesses facing closure in 2017

Posted by David Jackson / 12-Dec-2016

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This week a report announced that more than 5,500 restaurant businesses in the UK risked insolvency because the fall in sterling since the Brexit vote that has sharply raised the cost of imported food and wine. With prices on the rise, using new technology to dramatically reduce food waste presents the sector with an opportunity to at least partially stem the rise in costs.

Find out how River Cottage Canteen Winchester reduced food waste by ⅓ 

Accountancy firm Moore Stephens says that more than 5,570 restaurant businesses have at least a 30% chance of insolvency in the next three years, due inflationary pressures and stagnating disposable incomes.

According to DEFRA, the UK imports 48% of its food from overseas which means that the British hospitality sector is likely to experience price inflation as the pound devalues in the wake of Brexit. Restaurants, hotels and contract caterers often rely heavily on imported goods and are vulnerable to increases in costs in an already crowded and competitive marketplace.

In London for example there have been more than 200 new restaurant openings over the last year alone. Rivalry is fierce with many resorting to special offers to remain competitive. Feeling the pinch at home, ever price conscious consumers are unlikely to be happy about these costs to be passed over to them in the form of higher prices.

Finally, with the introduction of the National Living Wage initially set at £7.20 per hour and set to rise to £7.50 in April 2017, hospitality businesses are set to see additional rises in the cost base outside of F&B as well.

Mike Finch, Restructuring Partner at Moore Stephens, comments: “It’s been a tough year for many restaurants in the face of rising costs and fierce competition. It is unrealistic to expect UK restaurant groups to avoid the impact of the fall in the pound by substituting for UK produce – they are going to face a big hit. Restaurants have to make tough decisions as to how much they try to pass on to consumers; too much and they risk losing business, too little and they lose margin.”

As business leaders weigh their options as margins are squeezed, what is clear for hospitality operations of all kinds is that it has never been more important to run an efficient kitchen and food waste should be the number one target.

Traditionally hospitality businesses budget between 3-5% of the food purchasing costs to be written off as unavoidable food waste. Working with hundreds of kitchens our data shows that this figure is much more likely to be between 5-15% with some kitchens wasting up to 20% of all the food they buy. Put in the context of increasing food costs this is simply unsustainable.

Whilst this might seem like yet another problem to contend with, it is actually a great opportunity to be realised. Businesses like Accor and Compass Group have found that employing digital tools to help measure and manage food waste can consistently cut food waste in half thereby significantly reduce costs.

We find that proactively measuring and strategically managing food waste can typically cut food purchasing costs by between 3-8%. For larger sites this can be worth tens of thousands of pounds in savings with very little risk attached.  As The Bank of England, the International Monetary Fund and City economists all believe that inflation will rise to at least 3% by the end of next year, these reductions in wastage could at least partially compensate for the increase in food prices.

Whilst not a silver bullet for an unprecedented period of uncertainty for the sector, what is certain is that there is a very real opportunity for restaurants, caterers and hotels to combat rising costs by fighting food waste.

 Find out how much your kitchen could save


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