Why swift action can protect leisure operators as Brexit is triggered

Tuesday 4th April 2017

Simon Mydlowski, leisure and hospitality partner at Gordons, explains why swift action can help to safeguard operators as Brexit becomes a reality.

 

In the immediate wake of 2016’s historic referendum result, the general air in the leisure and hospitality sectors was one of uncertainty.

On the one hand, business owners were keen to safeguard their existing properties and tread carefully as they moved toward the inevitable exit, while at the same time operators were gearing up for what could have been a swift transition out of the European Union.

 

Article 50

Last year I wrote about how the key to navigating Brexit waters would be caution, in a similar way to how businesses remained afloat in the wake of the 2009 recession, and although talk of another economic crisis proved to be premature, things are about to change now that Article 50 is finally triggered.

In a recent panel discussion entitled Brexit – The Challenges and Opportunities for the Foodservice and Hospitality Industry, the general consensus was that now is not a wise time to be speculative.

The panel, chaired by Vernon Hunte, governmental affairs director at the British Hospitality Association, agreed that swiftness of action was likely to be the differentiator between those who remain unscathed by Brexit and those who are negatively affected.

Fellow panel member Bob Silk, Barclays hospitality and leisure team relationship director, was even more blunt: “I can see a time when, more than ever before, it is the nimble and fleet of foot that will survive. Those who are not fleet of foot will struggle. However, this is not a good time to be speculative.”

 

Joining forces

One potential solution – and one that many forward-thinking operators will already have implemented – is to join forces with other members of the industry to protect common interests.

Broader business plans may therefore need to take into account both internal and external relationships and how supply chain processes can help to strengthen resilience.

Jason Myers, chief executive of restaurant chain, Busaba Eathai, said the key is to embrace suppliers as partners.

He added: “You have got to work together because suppliers are getting the same cost pressures as you, but the customer doesn’t want to take it on so you have to come together to work it out.”

 

Consumer activity

Following the recession of 2009, consumers engaged in a significant amount of belt-tightening, which extended to how disposable income was spent, and it remains the case that a broad move to eating and drinking indoors would certainly impact the sector.

The key for business owners, then, will be weighing up potential consumer activity against business development plans and gauging whether the two are still in parallel – something that industry figures believe needs a firm plan, not a speculative one.

Myers added: “It’s not a time to be speculative, it’s a time to be sensible. Operators need to understand their own business and market and take the time to work out what it means to them.”

As was the case in the aftermath of the Referendum result, assurances from the government, overseas businesses, suppliers and trade partners about future agreements have helped to ease minds to a degree, but the triggering of Article 50 will truly get the ball rolling again – and swift, careful action will be needed to navigate the process.

 

As Brexit occurs, it will be prudent to take advice about any business strategy before embarking on it. If you need legal advice on commercial property matters, including the licensed premises sector, please contact Simon on 01274 202514 or simon.mydlowski@gordonsllp.com. For more information about us please visit www.gordonsllp.com/sectors/retail-lawyers/.