How restaurants can prepare for BrexitSmall Business Advice 16 October 2019
With Britain still due to leave the EU on October 31, it’s important that restaurants get themselves ready.
If you work in or own a café or restaurant it’s important that you prepare your business for leaving the EU as best as you can. Here we provide some practical tips to help you get ready for just some of the changes that will occur.
1) Review your HR plans
Undoubtedly one of the biggest challenges for restaurants after Brexit will be ensuring adequate staffing levels. In the UK almost 25% of food industry employees are currently EU nationals. Unless they have indefinite leave to remain, they will have to apply to the government if they want to continue living in the UK after 30th June 2021 (31st December 2020 if the UK leaves without a deal).
If successful in their application, they will be granted either settled or pre-settled status. If they can prove they’ve lived in the UK for 5 years continuously they should be granted settled status. However, if they haven’t, then they are most likely to be granted pre-settled status. While both confer rights such as being able to use the NHS, the children of those with pre-settled status may not be able to apply for British citizenship. See the Government website here for more information.
Inevitably this uncertainty has already led to some restaurant staff leaving the UK. As renowned Israeli-British chef Yotam Ottonlenghi told The Atlantic earlier in the year: “We’ve had a much slower influx of Europeans coming to work with us since Brexit,” he said, noting that job listings for junior chefs and kitchen porters that would have once received dozens of applications now only garner three or four.
Similarly, Willem Vlok, of fine dining restaurant Old Downton Lodge in Ludlow, told The Shropshire Star back in February: “This is a big problem and we are struggling to employ the right people. Unfortunately we do not have enough local talent that wants to work in hospitality in the UK. “Also with the weak pound it is not so attractive to leave your home country and come work in a foreign country.”
Nor is it just waiting staff and chefs that are the problem. Brexit may also lead to a shortage of HGV drivers to transport the food from the EU.
If you haven’t already, now is definitely the time to review your HR plans, especially if you rely heavily on EU employees. To avoid being short staffed, make an estimate of how many new employees you will need over the next year and how you are going to recruit them.
For example, you may need to consider spending money on recruitment ads as well as offering staff rewards as incentives to join your business. If you have to hire more inexperienced staff than previously you will also need to consider offering them training which means you will have to have someone in your organisation to provide that training.
2) Get your supply chain ready
Although the UK supplies around 50 per cent of its own food, it imports approximately 30 per cent of unprocessed food from the European Union, making the EU a major trading partner, according to UK government statistics.
Most modern restaurants serve an impressive array of continental dishes with ingredients sourced from the EU. When Brexit happens if you trade with the EU then you will need to make sure your business has an EORI (Economic Operators Registration and Identification) number that starts with GB to continue trading. You will also need to decide who is going to make the import declarations and check the rate of tax and duty that needs to be paid. You can get more information on the government website here: https://www.gov.uk/prepare-import-to-uk-after-brexit
In addition to import charges, restaurants will need to consider potential food shortages, especially in the short term. If the supply chain slows down and there are hold-ups at docks like Calais, this could have a major impact on restaurants, especially if fruit and vegetables that don’t have a very long shelf life aren’t as fresh when they arrive. Already some restaurants, as well as consumers, are starting to stockpile certain food items from suppliers and supermarkets, while many are looking to source locally wherever possible – see below.
However, there is a limit to what can be stockpiled. Monika Linton, co-owner and founder of the Spanish food company and tapas restaurant chain Brindisa, told Produce Business UK in January: “The supply chain obviously depends on the product, but…we can only stockpile things that have a shelf life. We imagine that the produce that we rely on for the restaurant that comes from outside Britain will be in short supply if there is trouble at the border.”
3) Start to think local
With inevitable disruption, at least in the short term, many restaurants are already turning to alternative suppliers in the UK to fill the gap. Some are even growing their own fruit and vegetables wherever possible.
For example, Brindisa uses British growers for a number of items that might traditionally be considered Mediterranean products, such as tomatoes and garlic. However whether local suppliers will be able to meet the increased demand post-Brexit is another matter. One concern is that food prices will rise, either because of tariffs that didn’t have to be paid before on EU imports or because of higher demand for UK-grown produce.
Another is that harsh British winters may make it difficult to rely on our own farms for everything that we currently import from EU countries where there are often milder conditions. As a result, some British restaurants will need to re-think their menus favouring dishes made with UK-sourced products rather than those from the EU.
4) Cut costs, increase efficiencies
The Brexit impact on the pound is difficult to miss. Since the referendum of 2016 it has fallen considerably against both the euro and dollar, making imports considerably more expensive, even before additional tariffs are added.
As a result, it is proving extremely difficult for restaurants to maintain profit margins, especially when faced with potentially increasing staff costs as well as business rates. While prices to the consumer will inevitably have to rise, business will almost certainly need to double down on costs wherever possible to maintain current profit levels.
This means reducing food waste wherever possible as well as finding newer ways to lower energy use, such as by using energy efficient bulbs and more efficient appliances.
It also means working in a more efficient way such as re-allocating staff to work in different areas of the business when it’s less busy and using the latest technology such as Paymentsense card machines that allow you to process payments and free up tables for new customers more quickly.
Brexit inevitably presents severe challenges for restaurants, especially in the short term, but some of these can definitely be mitigated with careful planning over the next few months.