Global Restaurant Investment Forum

11-13 February 2020 – NH Hotel Grand Krasnapolsky, Amsterdam

GRIF

11-13 February 2020 – NH Hotel Grand Krasnapolsky, Amsterdam

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How would you like your Brexit served?

Published 05 November 2018

By Peter Backman


The road to Brexit

Lord Palmerston, the British Prime Minister in the 1850s said of the Schleswig Holstein question “Only three people have ever really understood the Schleswig-Holstein business—the Prince Consort, who is dead—a German professor, who has gone mad—and I, who have forgotten all about it". And that too reflects the state of the Brexit question.

To take a single example of how bad things have become, there are plans in place to use the closed-off lanes of the M2 and M20 motorways in south east England as giant lorry parks extending for 30, 40, 50 miles.

How can the usually pragmatic British have got into this state? And what is the restaurant sector doing about it?

There is no clarity over the desired outcome

Eighteen months ago, when the government set off the Brexit negotiation process with its two-year deadline, it would have been sensible to have had the strategy and desired outcome agreed. Instead, after eighteen months, and with less than six months to the end of the Brexit countdown, there is no strategy and no statement of an ideal outcome.

In their place we have two (or perhaps more) factions within the governing conservative party fighting like cats in a bag over what they want the outcome to be. Is it Canada+++, Norway, a hard Brexit, a soft Brexit, Brino (Brexit in name only), WTO rules or something else? And crucially, because it’s a red line for both the UK and the EU, which of these will protect the current status of the Irish border?

Businesses are in a fog

The lack of clarity and stymied progress are exacerbated by roiling debates within each party – not only the governing Conservative party but the Labour party, the Scottish government and everyone else. And all this is going on while contact with the EU, with whom the only substantive negotiations can take place, is fractious and disorganised.

Not surprisingly the British people and British industry are confused. And that, of course, includes the restaurant sector which is trying to find out what is happening in this fog, and what will be happening after 29 March 2019 – Brexit Day.

Without this necessary understanding, restaurant operators are finding it immensely difficult to plan in a meaningful sense. Consequently, many businesses, notably smaller and less resourced businesses, are not doing very much and are trusting that others on whom they rely will have sorted things out in time.

Will there be hands on the pumps?

But others are making plans and that generally means planning for the worst. Two issues stand out above all others: maintaining supplies of food (and all other products, including equipment) and labour – are there going to be enough people to deliver the service to customers?

So far as having enough of the right kind of people in place (both back of house and front of house) it increasingly appears that the early rhetoric about severely limiting immigration that featured strongly in the 2016 Brexit referendum may be watered down (at least for a few years) and consequently, there may be enough people to allow restaurants to continue operating effectively. But of course, there may not. Operators are struggling to work out any sort of tactics, let alone strategies, on that basis.

Will supplies get through?

Of most critical concern, are supplies. It’s increasingly looking like Brexit will mean, at the minimum, severe delays at borders as paperwork is scrutinized and dealt with. UK business hasn’t had to worry about these things for forty years, so there is no real border inspection infrastructure in place.

The government is (seriously) considering chartering ships (who knows from where, and where they will be able to offload their cargos) to stock up critical supplies of food (and drugs and car parts and …).

So, it’s no surprise that the British restaurant sector is in a state of uncertainty. A common strategy is to rely on the supply chain to sort out the problems – but that’s a just a hope because the supply chain is no clearer on the options than anyone else.

Flexibility or stasis?

In the meantime, some businesses are making plans to do nothing in the weeks following Brexit so that they can pour all their resources into what they expect to be serious holes in the dyke in its immediate aftermath. Perhaps this strategy of total flexibility is the right one. Who knows? I’ll let you know in six months’ time.

Peter Backman is a member of the GRIF Advisory Board and has ben involved with GRIF since its inception. He is an expert on the structure and dynamics of the foodservice sector, and its supply chain. He enlightens senior executives and other people who make significant decisions in the foodservice sector including investors, operators and suppliers to the sector.

His forthright and challenging views are based on data-driven insights – as a former scientist his view is “if you can’t measure it, it doesn’t exist”. He has been involved, as a researcher and consultant within the sector, for over 30 years blending his knowledge with a deep understanding of the trends, key players and challenges of organisations with an interest in foodservice.