Restaurant operating costs rise above 50% turnover

Restaurant operating costs rise above 50% turnover

Average operating costs in the restaurant sector now account for over 50% of turnover, according to a new study in to the state of the licensed hospitality sector. 

The ALMR Christie & Co Benchmarking report, which surveyed 55 hospitality businesses, found that average overheads increased by 2.2% in the past year.

Operating costs across pubs and restaurants now make up 51.5% of turnover, the highest since the report was launched in 2007.

Businesses have been hit by the rising minimum wage, huge hikes to business rates and ongoing political uncertainty over the past year.

But the survey also found that many operators believe Brexit will have ‘little impact’ on their business in 2017, and are anticipating an increase in turnover.

Capital expenditure by hospitality businesses now exceeds pre-recession levels, but the report said that some of this was likely to be ‘defensive’ in response to the difficulties facing the industry.

ALMR chief executive Kate Nicholls warned that the continued rise of the minimum wage and expiration of business rates relief could hinder the sector going forward.

“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,” said Nicholls.

She added that any further growth could be 'undermined' if the Government did not provide the 'access to labour' that employers would need post-Brexit.

A recent KPMG study estimates that 75% of UK waiters and waitresses and 25% of chefs are from EU countries outside Britain.