35 of UK’s Top 100 restaurant groups now loss-making – up 75% in just a year

  • Oversaturated market, minimum wage hike put pressure on restaurants
  • Another minimum wage rise just weeks away

35 of the UK’s Top 100 restaurant groups are now loss-making, up 75% from just 20 last year, shows research by UHY Hacker Young, the national accountancy group.
UHY Hacker Young says that trading conditions have become increasingly difficult for restaurant chains dealing with oversaturation in the market as well as rising costs.
The firm adds that this research comes on the back of the high-profile struggles of several major restaurant chains in recent weeks, including:

  • Jamie’s Italian, started by Jamie Oliver, which has closed 12 branches as part of a Company Voluntary Arrangement (CVA) to restructure its £71.5m debt
  • Byron, the burger chain, which may close up to 20 of its 67 branches following a period of paying reduced rent
  • Prezzo, the Italian chain, which is expected to close some of its 300 branches as part of a restructuring
  • Strada, another Italian chain, which closed 11 branches over the festive period
  • Barbecoa, another Jamie Oliver chain, which entered administration in mid-February
  • EAT, the sandwich chain, which was rumoured in early February to be considering closing some of its 100 branches

UHY Hacker Young says that pressures of competing with numerous similar ‘fast casual’ restaurants in an overcrowded high street are a major driver of many large restaurant groups registering losses over the past year.

It adds that the National Minimum wage, which has risen by an above-inflation 19% to £7.50 per hour over the last five years, has added a substantial cost burden to large restaurant chains. From April 2018, the minimum wage will rise even further to £7.83.

Peter Kubik, Partner at UHY Hacker Young, comments: “More than a third of the biggest companies in the restaurant sector are losing money, and there is little respite on the horizon.”

“Pressures on the restaurant sector have been building for years, and the last year has pushed a number of major groups to breaking point.”

“With Brexit hanging over consumers like a dark cloud, restaurants can’t expect a bailout from a surge in discretionary spending.”

“Consumers only have a finite amount of spending power when it comes to eating out, and the oversaturation of the market means that groups that fall foul of changing trends can very easily fail.”

“The Government has ratcheted up costs with a series of above-inflation rises in the minimum wage, and we are just weeks away from another 4.4% rise in April. That will be tough for a lot of restaurants to absorb.”

About UHY Hacker Young:

 The UHY Hacker Young Group is one of the UK’s Top 15 accountancy networks with 110 partners and more than 620 professional staff working from 22 locations around the country. The offices within the Group provide a wide range of accounting, tax and business advisory services, with a reputation for integrity and reliability within the financial community, and particularly with London’s Stock Markets. UHY Hacker Young are also ranked 15th in the ARL Corporate Advisers Rankings Guide amongst other UK audit firms for advising London Stock Exchange listed companies.

UHY Hacker Young is a founder member of the UHY International network with offices in every major financial centre in the world. Further information can be found at www.uhy-uk.com



How restaurants are reacting to Vegetarian Month

March is vegetarian month. Recent news shows that an estimated 29% of evening meals in the UK are vegetarian or vegan. These numbers only seem to be increasing, but just how is the hospitality industry reacting? Wayne Redge reports

Reports show that sales of meat-free ready meals were up by 15% in January compared to 12 months before. Vegan numbers went up from 150,000 in 2006 to 540,000 just a decade later, with 1.2 million vegetarians in addition to this in the UK. Not only that, but there has been an uprising of ‘flexitarians’, those who reduce their meat consumption by choosing to have meat-free days. As a result, evidence shows that 25% of people in Britain have cut back on how much meat they eat. With all of these figures on the rise, the transitions to a meat-free way of living aren’t just a ‘fad’.

Signs of the hospitality industry acknowledging these statistics has come with many different reactions. Nando’s, the Afro-Portuguese chain restaurant known for its chicken, has been consistently adding to its range of vegetarian and vegan options over the past few years. The spiced chicken giant has now announced that two more vegetarian dishes will be added to its menu: golden brown halloumi sticks served with a pot of sweet chilli jam dip to start, alongside a new main of Veggie Cataplana (a South African inspired stew dish.)

A host of vegetarian restaurants are also popping up, giving people who have adopted this lifestyle a lot more options. Run by former mentee of Gordon Ramsay, Minal Patel, “Prashad” is a 2 rosette and Bib Gourmand standard Indian cuisine restaurant. The personalised and crafted menu boards created by Smart Hospitality encase an all vegetarian menu that has been the talk of popular review site, Trip Advisor, since the restaurant opened its doors. Receiving the “Most Talked About Restaurant On Trip Advisor Award” and a “Certificate of Excellence” on the site, it is proof of the popularity that a vegetarian restaurant can receive by focusing its efforts towards a collective audience.

January of this year saw a mass of high-profile restaurants trying out full vegan menus or dishes for ‘Veganuary’. Harvey Nichols brought a full vegan menu to its OXO Tower restaurant in the shape of a three course vegan meal and vegan wine list. Upon opening their menu cover, guests were welcomed by the sights of Grilled Tofu with Miso and a Poached Pear and Blackberry Dessert.


Even Michelin Star chef, Tom Aitken took part in his Tom’s Kitchen restaurant . Teaming up with vegetarian burger company, The Vurger Co, he served up a hoisin glazed mushroom patty with pak choi, red cabbage and crunchy spring onions ( pictured above). Due to the success of this vegan burger, he has adopted a vegetarian burger to his main menu since then.

The amount of vegan festivals has seen a massive increase too, with at least 75 festivals lined up for 2018 in the UK alone. The festivals are a celebration of the natural lifestyle whilst also introducing its participants to new vegan restaurants and foods that they may not have tried before. Restaurants are creating pop ups at these events to promote themselves to the vegan following and gain some new supporters.

So, with the popularity of no-meat lifestyles on the rise, it is clear that restaurants have an opportunity to increase their offerings and enable themselves to appeal to a wider clientele. If 25% of evening meals being eaten are meat free, would restaurants do well to make 25% of their offerings meat free? It might even serve as a cost effective alternative whilst not compromising on quality.

Wayne Redge is marketing assistant, Smart Hospitality Supplies

Quotas for female managers?

On International Women’s Day (8 March), Serena von der Heyde FIH MI makes the case for affirmative action to achieve greater diversity in the boardrooms of the hospitality industry19 Serena von der Hyde FIH

Like a lot of people, I don’t like quotas – I don’t think they are fair – but recently I have started to think again. Nearly 60% of the UK workforce in our industry are women yet only just over 20% of our managers are women, and these figures have been almost static for more than 20 years.  We know that businesses with more women leaders are more successful and more profitable, so why aren’t companies rushing to develop and promote them?  The benefits of diversity are proven, but still progress in achieving diversity is glacially slow.

We want a fair workplace for our young women and men, and optimum performance for our businesses, and yet a compelling business case has failed to bring about change; then should we consider quotas?

Quotas have been shown to get results, and fast.  They have been used across Europe to promote women in politics and business since Norway started in 2003.  Many countries including Iceland, France, Spain and now Germany have followed suit, and the numbers of board-level women have risen in those countries. What’s more, there is some evidence that where quotas have been in use for some time, diversity becomes self-fulfilling. The culture and infrastructure has changed to the extent that women and men are coming through to leadership levels in equal numbers. In Belgium, the quota system states that both sexes must be represented for applications for roles in politics, and recently it is male applicants that have been hard to recruit. For quotas to work, they need to come with strict repercussions. In France, businesses were threatened with de-regulation if they failed to meet quotas. In Spain there were no sanctions for not meeting quotas, and as a result Spain has been far less successful. Quotas without teeth are ineffective.

One of the main arguments against quotas is that they prevent promotion on merit. We want the best leaders for our businesses regardless of gender. But I challenge the notion that our meritocracy is working. If it was, wouldn’t we already have more women leaders? The truth is that our societal and cultural background is failing to provide a level playing field for our aspiring women leaders.  More women than men are graduating from our universities, and, on average, women have better grade degrees, but still we overlook their talents.  It is becoming clear that we have to learn diversity – it takes time for a culture to genuinely believe in the value of diversity, and then to implement processes that nurture it.

There is a difference between quotas and targets, in terms of delivering change; quotas enforce where targets incentivise. Personally, I believe that people learn better and change more when they can set their own agenda. Every business will have different issues affecting diversity, and real change is most effective when a strategy is developed specifically by the team for that business.  When regulations are imposed, teams spend half their efforts working on strategies to sidestep the new rules, and quotas can result in alienating the team.

For my own business, where we need to develop male leaders to ensure diversity, I will be:

  • Ensuring full and ongoing commitment to diversity from the leadership
  • Leading the development of our diversity strategy and targets
  • Publishing gender pay differences, and recording gender balance across the team and our leadership team

This type of approach gives businesses time to develop a pipeline of talented women (or in our case men), so that they can make quality appointments and showcase successful women within the business. I believe that hospitality businesses should be recording gender balance, monitoring gender pay gaps and publishing their own targets and strategy for diversity.  However, if these initiatives prove inadequate, then it is time to consider resorting to the faster, but blunter tool of quotas.

Serena von der Heyde FIH MI is the owner of The Georgian House Hotel, London

Sign up to the Diversity in Hospitality, Travel and Leisure Charter here.

Why is the casual dining sector in trouble?

Byron is one of a number of casual dining chains that are shrinking their estates

Five years ago, the casual dining sector was booming. Private equity houses were investing large amounts of money into new chains of restaurants which quickly expanded their outlets, for example Byron, the burger chain, was bought for £100m.

Today, the sector is, to say the least, struggling. EAT is the latest brand to announce closures. Byron is going through a restructuring, Jamie’s Italian has entered into a company voluntary arrangement, and Strada is implementing a closure programme.

What has happened to bring about this sudden reversal of fortunes? Roger Gregory, partner at Pitmans Law, has the answers. Read on

Roger Gregory
Partner, Pitmans
D +44 (0)207 634 4634
M +44 (0)774 760 3864
E rgregory@pitmans.com

Pitmans Law is a Business Partner of the Institute of Hospitality.

25th Hotel General Managers’ Conference celebrates ‘The Spirit of the Time’

Delegates (2)Over 470 hotel professionals gathered at the De Vere Grand Connaught Rooms, London, on 15 and 16 January for the 25th Hotel General Managers’ Conference. The sold-out event, entitled ‘The Spirit of the Time’, reflected on the past, analysed the present and looked forward to the future of the industry during a programme of expert talks and panel discussions with thought-leaders.

Cyber security

The conference began with CEO & Co-Founder of cyber security platform Trustlight, Oliver Rees, introducing delegates to an era of ‘New Innovators’. Rees shared stories of how companies are engaging with hackers to keep their own cyber security ahead of the game: “When it comes to data security, think about ‘when’, not ‘if’. You need to have a strategy in place to limit the damage and communicate it to customers”. Rees also advised delegates not to be afraid of trial and error with experimenting with technology and to embrace innovation.


The Evolution of Food Panel (2)The Evolution of Food panel discussion was chaired by hospitality consultant Amanda Afiya. Founder of Gorgeous Group Robbie Bargh, Group Operations Director at Marcus Wareing Restaurants, Chantelle Nicolson, and Store Director of Selfridges, David Jarvis, discussed the growing popularity of plant-based diets, meeting changing consumer demands and standing out from the crowd. According to Bargh plant-based diets are here to stay and represent a ‘culture shift’ rather than a trend. Nicolson stated that the “rising costs, uncertainty in the economy and a squeeze on disposable incomes will mean 2018 is one of the toughest for trading” and Jarvis pointed out that “everything nowadays in hospitality can be copied, except your staff and the experience they give”.



The importance of creating a brand was a key focus over the two days. In Revolution Through Revelation, Managing Director of Mixxa Ltd Paul Martin said: “The brand lives in your people and it’s not about what you do but how you do it.” Branding consultant Tim Watson also touched upon this in his session, Why Brand?: “You need to communicate from the inside out, and once you have internal buy in, then you are on your way to being an authentic brand.”

Leadership, performance and mindfulness

Performance coach Nigel Risner inspired delegates with his session on leadership and communication. He suggested that people can be divided into four groups based on their preferred communication style – Lions, Monkeys, Dolphins and Elephants – and asked the audience to decide which animal they are.

Risner also said that people spend too much time talking about what was rather than what will be in meetings, and any meeting should be no longer than 40 minutes.

Olympic Gold Medallist Crista Cullen MBE gave an inspiring presentation about Crista Cullenteamwork. Cullen was a member of the GB Hockey team that made history in the Rio 2016 Olympics. Cullen said: “We invested time in getting to know each other, analysing each of our strengths and weaknesses to understand how we can work together efficiently.” Cullen explained that  honest conversations are what made the team resilient and hungry for the challenge, making them train harder.

In a session about mindfulness, Director at Soul Nutrition, Katie Sheen, shared her tips on how to become more self-aware and how to calm the mind to lower levels of anxiety. “The more positive and self-aware we are, the more resilient we become, and this feeds happiness and innovation” she said.


The Future of Hotel Design panel chaired by SPACE magazine and Hotel Spec Editor Can Faik, discussed whether design is becoming too extreme. When asked where hotels need to begin, Creative Director at HBA London Constantina Tsoutsikou, said: “The lobby is the heart of the hotel so if you want to convey what you’re about, that’s where you start.” Creative Director at David Collins Studio, Simon Rawlings believes there’s a danger that hotels are trying to be and do too many things and forgetting what they do best.


Founder & Chairman of 80 DAYS, Mark Forrester and Co-Founder & CEO of Avvio, Frank Reeves gave two different talks in the Consumer Behaviours in the Digital Age session. Forrester outlined the advantages of using digital benchmarking to get the best understanding of how hotel websites are performing. “For country hotels, there is a conversion rate of 0.49% meaning that out of 200 visitors to your website, only one will make a booking. The conversion rate is nearly double for city hotels at 0.94%.” Reeves followed with a talk on Artificial Intelligence (AI). According to Reeves all hotels of all types must start looking into AI to improve the user experience and convert website visits to bookings.


In a time of adversity and disruption for the industry, the conference programme included a round-up of Everything You (Really Do) Need to Know to continue business. Covering National Minimum Wage, GDPR and the most recent update in licensing, the data and information provided ensured hoteliers were aware of all the legislation to come into place over the next 12 months.

On the evening of Monday 16 January, guests were treated to a Moët & Chandon Sue WilliamsChampagne reception before indulging in a three-course dinner created by Principle London’s Executive Chef Rodger Olsson and his team. The Caterer’s new Editor, Chris Gamm, introduced the Hotelier of the Year winner Sue Williams FIH MI, General Manager of Whatley Manor. Williams urged guests to get behind their teams and inspire the future professionals of the industry. Guests generously took part in a prize draw to raise vital funds for the Master Innholders Charitable Turst, Springboard and Hospitality Action, raising over £10,000. Acclaimed food writer Matthew Fort took to the stage after dinner to share his anecdotes of his time in hospitality.

The two-day event was chaired by Pride of Britain Hotels chief executive Peter Hancock FIH MI on day one and by award-winning photographer and hotel consultant Jeremy Rata FIH MI on day two.

Chairman of the Master Innholders Conference and General Manager of Grosvenor House, A JW Marriott Hotel Stuart Bowery FIH MI concluded the conference by inviting hoteliers to apply for the upcoming Master Innholders accolade and Aspiring Leaders Diploma.

For more information on the Master Innholders, please visit www.masterinnholders.co.uk

Keep Calm and Control Costs in 2018

Melvin GoldThe UK has been a country of uncertainty in 2017, fuelled by the drip-drip of 24-hour news. On a macro level it seems that 2018 will see more of the same: Brexit, terrorism, politics, economics and much more besides, writes leading independent hotel consultant Melvin Gold FIH as he makes some predictions as to what lies in store.

But Britons have proved themselves to be resilient folk as has always been the case. Yes, there is much to complain about and much to worry about, but the country fundamentally keeps calm and carries on.

It is perhaps surprising that hotel markets in both London and the regions are ending 2017 in positive territory, strongly so in the case of London. Nonetheless, the second half of 2017 has been tougher, as economic factors produced headwinds and the supply pipeline increasingly moved from the drawing board to reality. Inbound tourism has boomed, the weak pound having seemingly magnetic properties. For the time being the UK appears relatively cheap. That has benefitted London, Edinburgh and the country’s most popular tourist cities.

The brave souls at PWC put their necks on the line every year in preparing the hotel sector’s most widely available forecast. For 2018 they forecast London’s RevPar growth at 2.4% and the rest of the UK at a similar 2.3%. If those levels are achieved, they are likely to be similar to UK inflation, so not much in the way of real growth, but given the way the news is reported and some of the retail figures, it could be far worse.

Of course there are variances by specific location and market, too complex to discuss here. It is also also worth reminding ourselves that regional UK is not a single hotel market, and neither is London.

Although the uncertainties connected with Brexit have adversely affected the currency to create the tourism boom, most hoteliers are more concerned about its effects on costs rather than revenues. The currency change, perhaps exacerbated by the uncertainties of future rights of work and residency, has seen some European workers relocate to other countries. The value of their remittances home was affected by the currency movement. Increasingly hoteliers and restaurateurs bemoan staff shortages and recruitment difficulties and if this prevails – which it probably will – it is likely to cause a more competitive labour market and wage levels rising. The Autumn 2017 budget saw the announcement of a 4.4% increase in the National Living Wage in any case, which is well beyond sector revenue growth forecasts.

Notwithstanding that, there remains a quantum of new hotels still to enter the market in many towns and cities. PWC took that into account in their forecast but nonetheless those hotels need staff and even if they are supported by demand growth they may imbalance the labour market.

This is not the only cost pressure, though. Pension contributions, imported food and beverage, energy, and property taxes are all likely to rise. Thus it is likely that 2018 will be a year which, if hoteliers have reason to complain, it will be about staff shortages and rising costs. Revenues may give less cause for complaint, other than the fact that they fail to keep pace with costs which impacts margin. In such an environment it is the smartest and canniest operators that will have least grounds for complaint.

One thing sure to distract from the other headlines and create inflows of tourists is a royal wedding and we will have one of those in May 2018. Tourism chiefs and hoteliers will raise a glass to the happy couple.

Melvin Gold FIH, is a leading independent hotel consultant and commentator.
More about him and the range of services offered by his company can be found at: www.melvingoldconsulting.com

Members of the Institute of Hospitality will receive your annual statistical report ‘Spotlight on Hospitality’ at the start of 2018, packed full of informed insights into the year ahead. Remember to renew your membership to secure this and many more benefits in the coming year.

The Royal Wedding will be a welcome boost for hoteliers and tourism chiefs in 2018

One third of hospitality sector unaware of GDPR

PrintA survey[1] conducted by Lolly, the EPoS and payment solution specialist, and The Institute of Hospitality suggests that one third (33 per cent) of the hospitality sector is still unaware of the upcoming GDPR legislation, which comes into force on 25 May 2018.

EU General Data Protection Regulation (GDPR) is intended to strengthen and unify data protection for all individuals within the European Union. It aims primarily to give control back to citizens  over their personal data and to simplify the regulatory environment.[2]

The survey also uncovered that nearly three quarters (73 per cent) of those surveyed wouldn’t know what to do if customers requested details of the data being held about them. And half (50 per cent) of respondents said they were not aware of how their methods of personal data processing will be impacted under the new regulations.

Four out of ten respondents were unsure as to whether their operational data is safely backed up. However, on a more encouraging note, more than half (57 per cent) of hospitality providers are confident in the systems they have in place.

Peter Moore, CEO of Lolly, said: “A number of the findings uncovered in the survey are alarming given organisations of every size are going to be affected by the GDPR legislation. This will include small hospitality providers with fewer in-house legal and IT resources.”

“GDPR is only around the corner. It is time to take action and get to grips with your data – before it becomes too late. The fines are high, up to €20m or up to four per cent of the annual worldwide turnover, whichever is greater.[3]

Peter Ducker FIH, chief executive at the Institute of Hospitality, added: “Getting ready for GDPR is a good opportunity for operators to spring-clean their databases.  There is a tendency in organisations to hoard data and you will probably be surprised by how much data you hold – about customers, employees and suppliers – that is old, out-of-date or of no benefit to the business at all. That’s the first step. Then it’s a question of getting in touch with your customers and asking for their consent to be contacted. It is an opportunity to forge a new and more meaningful relationship with them.”

In order to get ready for GDPR, companies must:

  • Review the types of personal data currently held on file (paper, audio or digital formats);
  • Identify lawful grounds for collecting the data;
  • Identify how the data can be kept correct and up-to-date;
  • Identify redundant or erroneous data to cull, and
  • Make a plan as to how ALL of this data is going to be kept secure.

About Lolly
Lolly is a Point of Sale (PoS) specialist serving small businesses across the UK in the hospitality industry; from coffee shops, pubs and night clubs, to mobile catering, pop ups and corporate caterers.

The company offers a complete point of sale package where customers can use its EPoS software on tills and PoS tablets. Lolly then networks these to card payment machines, to speed up service and provides a cloud-based back office, supplying real-time business analytics. The tills and software are designed to help businesses with their bottom line.

In February 2017, Lolly launched LollyPoS – the first Windows-based downloadable EPoS with integrated payment processing. The solution is designed to provide a simple, efficient and dependable point of sale solution anytime, anywhere.

Lolly provides enterprise level EPoS to hospitality and retail SMEs at an affordable price. Today, it is the only UK business of its kind that can truly scale from a downloadable product to a fully connected real-time network of tills, powered by an enterprise-level inventory reporting management system.

Find Lolly online:

Website| www.itslolly.com

Facebook| www.facebook.com/LollyLtd

Twitter| https://twitter.com/Its_Lolly_Ltd

[1] The survey opened on 3rd October 2017, 120 hospitality sector respondents

[2] https://en.wikipedia.org/wiki/General_Data_Protection_Regulation

[3] https://en.wikipedia.org/wiki/General_Data_Protection_Regulation#Data_breaches