The foodservice industry is set for further consolidation while the restaurant trade is facing a “crisis of confidence” as promotional risks backfire.
Experts have forecast further mergers in a market battling tight margin pressure amid news the South African conglomerate Bidvest has received “unsolicited proposals” for a £2.5 billion deal to buy its foodservice arm 3663.
Leading foodservice analyst Peter Backman, managing director of Horizons, told freshinfo the bid “hails the beginning of what is likely to be further consolidation in the traditionally fragmented foodservice supply business”.
“Sales through delivered wholesalers last year accounted for 53.5 per cent of the market but the fact the foodservice sector has been flat since 2008 has put pressure on all stages of the supply chain with a relentless search for lower prices and cost savings,” Backman said.
He also said the tactic for chain restaurants to offer two for one and half price deals or hitting the popular £15 price point has “locked in” some chains into offering cheaper meals than their original demographic and shifted their custom.
While nearly 20 per cent of restaurant, pub and café owners remain optimistic that the economy will improve over the rest of 2011, almost a third (31 per cent) think there is a real risk of a double dip recession which would be extremely damaging for their business, according to the latest bi-annual SME Pulse survey by Aviva.
The data revealed more than a third of restaurateurs have found trading conditions tougher than they expected so far this year. Just over a quarter (27 per cent) said that 2011 conditions had been largely as expected and on a more positive note, over a third (35 per cent) have actually found this year’s conditions easier than expected, the highest proportion of any business sector questioned.
David Bruce, commercial product manager at Aviva, said: “It is evident that the tough trading conditions we saw last year have continued into 2011. Confidence among SMEs is as low as it has been since the onset of the recession and many feel they are in real danger of losing their businesses should the economy fail to improve this year…
“Looking ahead, there seems to be little change in the tactics that will be employed by small business owners to improve trading - we can expect further discounting, increased efforts to diversify into new product and service lines, and regrettably a reduction in staff numbers.”
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