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The impact of Brexit on hospitality food supplies

Impact of Brexit image



Lettuce droughts and menu substitutions will characterise Brexit for many in the hospitality sector, but what can operators do to mitigate the issues they may face?

Imagine this, no fresh fruit and veg, perishable food stuck at British ports for days and supermarket groups commandeering the lion’s share of any produce available. No, it’s not a fantasy dystopian future or a wartime flash-back. These are a few of the, admittedly worst case, Brexit scenarios being discussed in hospitality food supply circles.

Frustratingly for UK businesses, clarity over Brexit remains elusive. As the Prime Minister negotiated an extension to Article 50 last week, the UK was none the wiser about what the final Brexit deal will look like. Negotiators have gained themselves a reprieve and the UK will not now leave the European Union on the 29th March. But to secure an extension of the Article 50 deadline to the 22nd May, the UK will need to confirm a withdrawal agreement this week. If there is no agreement, the country will only be granted an extension until the 12th April. Then all bets are off. Options run the gamut from no deal, to another referendum, a general election or possibly even no Brexit at all.

With so much uncertainty, what will Brexit mean for food supplies in the hospitality sector?

Mike Williams, Operations Director at Food Alert, says that the big issue will be at Dover. He says a large proportion of UK food is imported, as much as 48%, with 79% of this coming from the EU. The majority of imported food comes in through the port of Dover. “Even if the UK says no border checks, as soon as the French say we are adding checks, even 90 seconds extra, it creates a concertina effect. Queues will quickly move from zero to two hours and in a short time, two days.”

The recent strikes by French customs officers, protesting against a lack of preparation for Brexit, gave a little taste of the chaotic scenes we could see portside after Brexit, he says. It doesn’t help that the food industry has become reliant on ‘just in time’ services leaving it vulnerable to any kind of delay. “Two days [of delays] for containers of bananas or fruit from Spain, and realistically we will have a problem in the quality,” Williams warns.

Stockpiling might seem like a potential answer but large suppliers have already said it is relatively useless. Although they admit to doing it to some degree. They are buying more freezer space but are having to use working capital to pay for it. But says Williams: “However the EU exit happens, we are not going to run out of all products. The UK is self-sustaining in some food stuffs, such as milk and bread, though less so in others such as meat.”

When it comes to accessing what’s available, UK hospitality businesses may find they are not at the front of the queue. “With UK produced food, the issue is that the majority of that food is snapped up by supermarkets. For hospitality, the difficulty will be getting food away from the retailers,” says Williams. With all this to consider, what can businesses do to mitigate potential problems?

Williams suggests it could bring back a level of seasonality and he says chefs already look at “reformulation” when products are not available. Reformulation could also help businesses manage the issue of an increasingly weak British pound. Costs of imported goods are already rising as the pound has fallen in value on the back of Brexit uncertainty.

One hospitality professional that has experienced rising food costs is Philip Chambers, General Manager at K+K Hotel George, in London. “The costs of certain foods have risen up to 25 percent in the last 12 months,” he says, “with the lower value of the pound and inflation. We re-engineer the menus, but then the prices go up again.”

Ahead of Brexit, and to prepare for even more price rises after the UK leaves the EU, Chambers says K+K Hotel George has streamlined its supply chain so it can buy in bulk. But there is a downside. “It has stopped us buying locally,” he says, “they can’t match the prices.” Asked if he is concerned about food delayed at the ports, he says: “Because we’ve switched to a large supplier we are not so worried, because they have large stock holdings. If we hadn’t done that I would be very worried.”

Food cost increases are eating into profits, he says. “The largest revenue for food is from breakfast, if we keep seeing increases in food prices we will be running breakfast below cost. If that happens we might need to change to exclusive breakfast rates only instead.”

Businesses are approaching potential Brexit impacts in a proactive and pragmatic way. And with so much still up in the air, Williams offers a glimmer of optimism. “I don’t think Brexit will be the cataclysmic chaos that some of the media are suggesting. Food businesses will find a way.”