Collaboration between operators in the sector is the solution to dealing with the pressures of rising costs. David Read, chief executive of consultancy Prestige Purchasing, told delegates at M&C Report’s Future of Pub Retailing conference in London that one of the main ways of avoiding the cost squeeze was for companies to collaborate on buying. He said that the opportunity existed to create a consortium of some of the main players in the sector and that by working together to purchase in larger volumes it could help them drive lower margins. Read said: “Through collaboration an opportunity exists to create a steep change to avoid pain. “Additional volume will also enable deals to be done further down the supply chain delivering even more value.” He pointed out that collaborations would also help cut costs through improved product rationalisation and that by working with competitors in the same sector, the profile of what they were doing was very similar making the whole process easier. Read gave the example of the Mayfair Group, a consortium formed of eight different hotel groups, which by working together had targeted annual improvements of £6m on a total spend of £86m, with projections of over £10m improvements. He also highlighted that the issue of availability of food was here to stay for the next five to 10 years and that pub and restaurant operators needed to adapt their buying strategy and invest in procurement. Read said: “Relationships with suppliers need to change and there has to be a move from market techniques to supply chain knowledge. “There have been no real partnerships in this sector because historically there has been oversupply, but a new world is coming up in the next five to 10 years and getting hold of the right quantities and quality of food is becoming a problem. “Partnerships will help to avoid pitfalls around pricing and availability.”

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