BREXIT SIX MONTHS ON: NATION’S TAKEAWAYS ARE STRUGGLING WITH IMPLICATIONS OF LEAVING THE EU

Whether it be from an economic, environmental or logistical standpoint, there is no doubt that Brexit has affected many businesses across the UK.

Recent research from Foodhub has revealed that the nation’s takeaway restaurants have been struggling with unforeseen implications following the UK’s departure from the EU on 31st January 2021. This is primarily due to two factors – the rising cost of ingredients and delays in ports meaning it is difficult for takeaways to effectively manage their business in the current climate.

The rise in food costs

While the nature of the industry means that food prices will always increase from time to time, the implications of price hikes associated with leaving the EU have been detrimental to takeaway businesses. Businesses are usually given a level of notice or foresight should industry-wide price increases be imminent, but the uncertainty of a deal/no deal Brexit put a huge level of anxiety on businesses, and before they knew it – the prices of their essential items had increased.

Phil Adams, General Manager at the Tiger Bite takeaway in Stoke on Trent, said: “Since leaving the EU, we have seen price increases in flour, chips, chicken and cheese, which are four of our most heavily ordered items. The main problem was the lack of information we had prior to this, as it just made forward planning impossible.

“In addition, other or most items will have had a small rise, but the flour, chips, chicken and cheese are the ones that have hit us the hardest. Our food cost on a standard week increased pretty much week by week and availability became increasingly more challenging.”

Despite the hike in prices, Phil said that his business simply didn’t have the choice of removing these four key items from the menu, as this would have inevitably impacted sales in a negative way.

He said: “We had no choice. We just had to carry on and pay the increased cost, as I’m sure the vast majority will have done. Prices changed in a matter of hours and days. Demand became higher, supply lower. Our suppliers were ultimately at the mercy of their suppliers. The chain goes upwards. Ultimately, we come second to last on that chain. Only our customers suffer after us if we can’t guarantee a supply.”

In addressing customer demand, Phil added: “90% of our customers order chips and this was the biggest cost rise and the highest risk of being unavailable. How many people will realistically order from a takeaway that has run out of chips, or hiked their price dramatically? Could you imagine KFC running out of chicken, again?!”

The effect of port delays

And it’s not just the increasing cost of ingredients that is the problem, the delays at ports that took place over Christmas last year have also crippled the supply chain.

Phil said: “A huge amount of our food is imported, and we simply could not risk disappointing the volume of customers we serve.

“If a business doesn’t have a core item available, you lose a whole order of £15-£20, not just the £2 portion of chips. And you’d lose a massive percentage of those orders. Overnight your business has the potential to slip away.”

Due to this loss of supply, Tiger Bite, which is a firm favourite in the Stoke on Trent area offering a variety of different cuisines to locals, had no choice but to delay any investment into new equipment for his business. Additionally, he made the difficult choice not to recruit any more team members in order to protect the income of his existing family of workers.

Another blow to the supply chain could come in the form of a severe lack of HGV drivers, which are not among the list of eligible skilled occupations, meaning they are currently excluded from skilled work visas.

In fact, the Road Haulage Association has reported there has been a drop of around 15,000 UK drivers, relating to Eastern European drivers leaving the UK at the start of Brexit.1

The economy

On a more general note, the current economic climate also does not help the vulnerable position of the nation’s takeaways. During the first lockdown, many people were put on furlough, meaning that they simply did not have the money to invest in increased takeaway prices.

Phil said: “Just because we are being charged more doesn’t mean that we can always pass this onto the customer. Customers understand that prices increase, but at a time when furlough was in full swing, could we really justify putting this cost to our loyal base as a business? And at such short notice?”

“If we did, would we lose customers? Were they already using what disposable income they could to treat themselves to a takeaway? Had their weekly food shop already increased due to the same issues?”

Things could be much worse, however

But things could have been much worse for the nation’s takeaways over the past year.

Phil said: “In hindsight, the fact that the restaurant dine-in business was closed probably made things just about bearable. Had everyone in hospitality been in full trade, I’m almost positive many takeaways would have folded, as their buying power simply can’t match that of the huge high street chains.”

He added: “Ultimately, through the pandemic and lockdown, it is the local takeaways that have catered for the masses. Only supermarkets or stores of a similar nature, managed to stay open. The impact of Brexit could have had far worse consequences.”

Ardian Mula, CEO of Foodhub, said: “Feedback from our partners has been that they have been caught in the perfect storm during the last few months. The national lockdown has unequivocally saved the livelihoods of many takeaway owners, and while we are proud to have been supporting the public during this time, the industry cannot rely on this for much longer.”

Phil Adams added: “In November and early December, we effectively wrote off any profit and invested our money into ensuring we had enough stock to cover the Christmas period if the ports weren’t to reopen, but many businesses will not have been able to do the same.”

The future is uncertain

Phil said: “Unpredictable price rises and change could make life for takeaways and the food industry more difficult in the near future.”

This means it is more important than ever that takeaways have full control over the management of their business, which can be difficult when relying on many of the popular aggregator sites such as Just Eat and Deliveroo. These charge commission rates of up to 35%, meaning takeaways are already facing a hefty charge before they have even considered the difficulties coming from leaving the EU.

Ardian Mula added: “At Foodhub we operates a 0% commission model, instead charging a flat monthly rate which allows our partners to operate flexibly and remain in control of their business saving on average £2,2502 a month vs using our competitor sites.

“It’s incredibly important to us that we support the British high street – we’ve built our whole business model around this. But it still stands to be seen just how our industry will navigate the changes that are sure to keep coming as we continue to get used to life outside of the EU.