2021 was a challenging year for the food & beverage industry, but there were many valuable lessons learned in the process. As we look to the year ahead, it’s time to think about ways in which F&B business owners can put these lessons to good use and take steps to set themselves up for success amidst the arrival of new trends and customer behaviours.
Lessons Learned from the Pandemic
One of the key principles underscored by covid-19 was the importance of an agile approach. The businesses that fared best were the ones who were able to rapidly adapt to all of the changes that the pandemic thrust upon the industry – some of which quite literally happened overnight.
The past two years have also given business owners no choice but to become more resilient. Those who have struggled through lockdowns, ever-changing restrictions, market shifts and economic hardships are undoubtedly tougher now than ever.
The challenges of the pandemic have made gains in efficiency more crucial than ever. As a result, F&B businesses have adopted integrated operational ecosystems that extend far beyond just finance and accounting.
Prior to the pandemic, most cafes and restaurants simply used POS systems for billing and transactions. Now, however, businesses of all sizes are leveraging their POS systems and using them as omnichannel tools to create a consistent brand experience for the customer.
These upgraded POS systems allow cafe owners and restaurateurs to streamline operations, keep costs low and provide a better customer experience from start to finish. They also provide a deeper insight into guest behaviour and permit the creation of a more personalised experience.
Finally, the pandemic has put mental wellbeing at the front and centre of public health issues. This has been particularly relevant for small business owners, who tend to neglect their own welfare in favour of their enterprise. The realisation that mental health and business success are linked has caused many organisations to re-examine workplace culture and emphasise the importance of a growth mindset during challenging times.
Steps to Take Moving Forward
Create Value for Suppliers
One way to optimise your F&B business is to not only value your own customers, but to be a valuable customer for your suppliers.
Creating a trusting relationship with your suppliers may prove invaluable when the going gets tough. It’s also worth remembering that it’s a lot cheaper to keep an existing partnership than to find a new supplier.
It’s important to not only pay your suppliers in a timely manner but to maintain open and honest communication with them. You should strive to treat them with respect and show you that you value the relationship.
A little innovation goes a long way too. If you find a way to make working together more efficient or a more effective way of communicating, don’t hesitate to share your thoughts with your suppliers.
Build a Strong Support System
Behind every great entrepreneur lies a strong support system.
Just as flowers need the right soil to be able to grow, you need people around you who build you up and provide you with the encouragement you need when things become difficult.
If you’re constantly surrounded by people who criticise and question you, you will be drained of energy and begin to question your own mission and abilities.
Of course, this doesn’t mean surrounding yourself with yes men. You need people who believe in and appreciate you, but who will also challenge you when appropriate and give you constructive, honest feedback.
Get Clear on Your Finances
When you are clear on your finances, you won’t have to spend hours agonising over every decision or feel anxious because you’re not sure how you’re faring.
Financial clarity is about understanding your resources, outlining clear goals and keeping a close eye on your progress. It’s more important than ever to achieve this in 2022 because it will empower you to make prudent and profitable decisions at the right time so that your business reaches its full potential.
Don’t Delay Decisions
At one point or another we have all been guilty of putting off a decision for fear of making the wrong choice, but hesitation won’t get you anywhere. In today’s fast-paced environment, you can’t be afraid to act. Remember that imperfect action trumps inaction every single time. Of course, achieving financial clarity helps enormously with this – see above.
Stay On Top of Trends
The rapidly changing business landscape means that trends are moving at a similarly fast pace. It’s more important than ever for F&B business owners to stay on top of trends, whether that means shifting customer behaviours, new opportunities or increasing demand for a particular kind of experience.
With that in mind let’s take a look at the top business and trend predictions for 2022.
2022 Business Predictions
Year upon year, delivering a great customer experience only becomes more important. What’s more is that when it comes to customer service, your competition extends way past your particular industry. Customers’ expectations are increasingly across the board high thanks to big companies going above and beyond to deliver.
This is particularly relevant to the F&B industry. The popularity of delivery services and at-home dining during the pandemic has put more pressure than ever on cafes and restaurants to deliver a memorable and meaningful in-house experience.
High rates of inflation have led to a significant increase in the minimum wage. As of 1 April 2022, the National Living Wage will rise by 6.6% to £9.50.
Staff shortages across the F&B industry are also driving wages up, as employers are forced to offer more generous compensation in order to attract talent.
In April 2022, the National Insurance rate will increase by 1.25%. In April 2023, NI will return to its current rate and the additional 1.25% will be collected separately as a Health and Social Care levy.
Dividend tax rates will also increase by 1.25%. This means that the basic rate will rise to 8.75%, the higher rate to 33.75% and the additional rate to 39.35%.
The current income tax rates and thresholds will remain the same, although it’s worth noting that due to high rates of inflation, many taxpayers will face a higher bill.
The cost of running a business has been rising rapidly over the past few months and this trend is set to persevere throughout 2022.
As discussed, wages and taxes will increase, whilst energy prices are expected to rise even further. This means that F&B business owners need to be smart about energy usage and prepare for higher supplier costs, too.
It’s not all doom-and-gloom. Research by Simply Business found that a quarter of small business owners felt confident that trading will return to pre-pandemic levels by spring or summer 2022.
Although the arrival of the Omicron variant in the UK put a damper on pre-Christmas sales for many hospitality businesses, research by BarclayCard revealed that the average customer spend is up by 15% compared with 2019 levels.
F&B Trends to Watch in 2022
Sustainability and Savings
When you think of wine, glass bottles are what usually spring to mind. However, the use of cans, pouches and kegs is on the rise across the UK. This can result in 15-30% savings and reduced labour costs, and is also in line with the pressing sustainability agenda.
This approach has typically been explored by lower-end brands but increasing numbers of fine South African wineries are testing out this new approach.
Meanwhile canned wine, a longtime commuter favourite, is also likely to crop up more frequently in restaurants in a bid to make high-end wines more accessible to consumers.
A “Take It Or Leave It” Approach
Over the past few years, cafes and restaurants have bent over backwards to accommodate allergies, intolerances and trendy dietary requirements. However, more and more high-end establishments are flat-out refusing to adjust their dishes.
For example, Chef Gareth Ward in Ynyshir, Wales was recently praised by Guardian food critic Grace Dent for his “delicious pigheadedness” when it came to guest requirements. If guests wish to adjust a dish at Ynyshir, they must telephone in advance or else their request will be flatly refused.
This approach is likely to gain popularity as food costs rise and staffing issues continue. It simply doesn’t make sense for high-end restaurants to pander to picky guests.
Cash Flow Concerns
Many F&B businesses have been accumulating debt throughout the pandemic due to steep rent debt, loan repayments and HMRC tax liabilities.
In some instances, payment deadlines have been delayed due to the pandemic but now that we are starting to come out the other side, these debts are piling up.
For example, there was a lease forfeiture moratorium that prevented landlords from evicting commercial tenants who were unable to pay their rent. That, however, is expected to come to an end in March, presenting serious problems for many business owners.
Speaking to a hospitality publication, property agent managing director Ted Schama said that whilst he does not anticipate “a tsunami of business failures,” he acknowledged that “for those who haven’t been able to sort their house out, it will be the end of the road.”
More Diverse Southeast Asian Cuisine
The UK is not short of Southeast Asian eateries, but the vast majority are either Vietnamese or Thai. However, in the coming year we can expect to start seeing more diversity, especially in London.
Filipino food in particular is starting to enjoy increased popularity, with concepts such as Kisa and Kin, Sarap and Ramo Ramen introducing the cuisine to new audiences.
Meanwhile, Burmese, Singaporean and Malaysian restaurants are also cropping up across the capital.
Dessert bars are set to come back with a bang in 2022.
The Proof will launch a bakery and profiterole bar in Dalston, whilst Andew Sheridan will be adding a dessert bar to his fine dining restaurant, 8. He’s planning a solar system-inspired tasting menu and wants guests to feel as though they are “eating on a spaceship.”
Although dessert bars are a notoriously tricky genre of restaurant, public attitudes towards dining out have undergone a significant shift during covid-19. These new concepts aren’t just about sweet treats, but about social spaces and experiences.
Plant-Based Goes Mainstream
Plant-based cuisine has been gaining popularity for years but 2022 will be the year we see it become firmly embedded into the mainstream.
Many high-end restaurants across the world are pivoting towards plant-based menus. In fact, chef David Humm left his role at Claridges’ in-house Davies and Brook restaurant over the hotel’s refusal to allow him to create a fully vegan menu.
However, this shift is happening at both ends of the dining spectrum. McDonalds has debuted its vegan McPlant sandwich and Burger King now offers vegan nuggets and a plant-based version of its classic Whopper. Other popular chains such as Subway, Pret-A-Manger and Nandos have all also recently expanded their menus to include more plant-based offerings.
Adapting to the new normal goes way beyond hand sanitizer and masks. Staff shortages across the hospitality industry coupled with large numbers of workers in self-isolation means that restaurants can no longer afford to be as flexible with timings as they once were. As a result, we will see a shift towards shorter opening hours, fewer days per week and earlier final seating times. Many high-end restaurants are also likely to adopt a single sitting.
Innovative Menu Engineering
Rising food costs and supply chain issues are forcing restaurants to get creative in order to preserve profits and keep guests happy. The focus will be on finding more affordable, but equally high quality substitutions – for example, trading mussels for scallops. Expect to see an emphasis on nose-to-tail cooking, too, as cost-effective cuts start to take centre stage.
It’s also important for businesses to keep a close eye on portion control. If guests frequently fail to clear their plates, it’s a sure sign that money is being wasted.
Whilst some restaurants will struggle in the coming year, 2022 is set to be a time of great innovation and creativity in the culinary world. We’ve outlined just a few of the trends we think will dominate over the next 12 months – from plant-based cuisine becoming mainstream to dessert bars making a comeback. And as always, Gains will be here to support F&B businesses every step of the way by delivering structure, efficiency and insight.
Finances are what make or break a business. We help your cafe, restaurant or cloud kitchen grow more by providing financial management solutions. Follow us on Instagram to get an idea of what we can do for you. Follow us here: @gainsaccountants_