(last updated July 2019)
What has been happening in the Chinese catering sector
In recent years the popularity of eating out has grown enormously and there are now thousands of eating places in Britain offering a wide range of different types of cuisine. Even when people don't eat out, they often get a take-away to save them having to cook.
Although many Chinese restaurants have benefited from this trend, it has also resulted in a huge increase in competition. Some Chinese restaurants have been slow to notice that peoples' tastes have changed - not only their taste in food but also their preference for the surroundings in which meals are served. Menus in some Chinese restaurants haven't changed for years, and there are signs that some diners are getting bored with the 'standard' Chinese restaurant and are looking for something genuinely new and authentic. The mid 2000s saw a growing number of restaurants move away from the traditional Cantonese menu towards food from other regions, such as Fujian, Mongolian and Szechuan. The décor in Chinese restaurants is often quite formal and doesn't always reflect the more relaxed approach to eating out that younger diners in particular prefer - although 18-24 year olds spend the least, they eat out more frequently than any other age group.
There are lots of exciting new restaurants springing up all the time so to succeed a new Chinese restaurant probably needs to offer something a bit different. Bear in mind that people have become increasingly health-conscious so it would be a good idea to put together a menu that goes easy on things like fat and salt.
Although demand for eating out is forecast to continue to grow in the long term, think about whether:
- demand will be high enough in your area to support your restaurant. If you plan to locate in a rural area, there simply may not be enough customers unless you are confident you can attract them from further afield
- your local economy is healthy - if your area has been unlucky enough to suffer from many business failures and factory closures recently your customer base is not likely to have much disposable income
- you will be able to compete against other Chinese restaurants and eating-places in your area. Since the introduction of smoking bans throughout the UK many pubs have focused on providing meals and this has increased competition in the sector
- you will be able to find experienced chefs and other staff. It can be difficult to find trained Chinese catering staff and you may need to train Western employees.
Immigration rules make it difficult for Chinese restaurants to recruit enough chefs. As well as obtaining work permits, restaurant owners have to pay a fee to import labour from outside the European Economic Area and they must pay a minimum salary to ensure that the imported labour is highly skilled. This makes importing skilled chefs from Asia too expensive for many Chinese restaurants. This and the number of workplace raids carried out by Home Office officials targeting restaurants and take-aways have led to many Chinese restaurants having to pay large fines for employing staff who are in the UK illegally.
In the late 2000s and early 2010s food prices rose sharply. Rice prices in particular went up steeply, but the economy began to slow down. Many Chinese restaurants found it hard to stay profitable without putting up their menu prices, but people were reluctant to pay more for non-essentials like eating out when they had less money in their pockets to spend. Some restaurant owners reduced their portion sizes, while others changed to less expensive ingredients to help keep their businesses profitable. The economy remained very weak into the early 2010s, making it difficult for businesses like restaurants that rely on people having enough money to spend on non-essentials. Things did begin to improve in 2013 though, and 2014 was a much better year.
As the economy started to improve, wages increased and people felt more secure in their jobs. This led to an increase in spending on entertainment, including eating out. By January 2016 the average spend per person was higher than at any time in the previous three years and over 70% reported that they had eaten out in the previous two weeks.
The vote in June 2016 to leave the EU led to greater economic uncertainty. Increasing inflation and falling confidence in the economy meant that consumer spending on meals out started to weaken and growth in the restaurant sector slowed further in 2017. Restaurants are finding that prices need to be kept low to remain competitive. Although food prices eased back during the mid 2010s, helping restaurateurs with their margins, they increased after the fall in the value of the pound following the Brexit vote, especially the price of imported ingredients and foodstuffs from Europe and Asia. This affects profitability, which is reduced further by annual increases in rates, the minimum wage and the living wage. Little change is expected in 2018 and 2019.
In 2009 the government introduced new laws to make it illegal to use tips and service charges to make up staff wages to the level of the National Minimum Wage. The Department for Energy & Industrial Strategy has produced a code of best practice on tips for the catering industry. You can download this from the Gov.uk website.
During the 2000s the Food Standards Agency introduced the Food Hygiene Rating Scheme ('scores on the doors') for food businesses like restaurants (there is an equivalent scheme in Scotland). Under the scheme, businesses are encouraged to display the results of their latest food hygiene inspection outside their premises. In Wales it became a legal requirement to do this from late 2013 onwards and Northern Ireland followed suit in 2016. The legal requirement to display the results of food hygiene inspections is set to come into force in England by 2020 at the earliest and it is expected that Scotland will then follow suit. More and more customers look out for inspection scores when they visit a restaurant or take-away. You can find out more on the Scores on the Doors and Food Standards Agency websites.
Technology is increasingly affecting the catering industry. For example a number of online ordering services, such as Just Eat, Hungry House (taken over by Just Eat in 2018) and Deliveroo have been launched to enable people to choose and order take-aways through the internet for local collection or delivery. Participating restaurants receive order details and payments through the online service provider. Although the business pays commission for this service, they have generally increased sales significantly. It is estimated that online orders now account for about 40% of food delivery orders in the UK. Buying take-aways is one of the most popular ways to eat out and Chinese food is the biggest selling food category after pizzas, with one in ten British people eating Chinese food at least once a week.
Web-based table booking systems are growing in popularity too. And the Tripadvisor hospitality review website is now very widely used by diners, so a good rating and feedback profile on the site are more or less essential for success.
Keeping up to date with developments
Joining a trade association is an excellent way of staying up to date with developments in your industry.
The catering industry is well represented by different associations, including UKHospitality (UKH - includes the Restaurant Association). There is also the Asian Catering Federation (ACF) which works together with the Chinese Takeaway Association UK, the Federation of Bangladeshi Caterers UK and the Malaysian Restaurant Association. You can find out more about the BHA and the ACF on their websites.
You can get a lot of useful information by visiting a trade show or exhibition for the catering industry. The Exhibitions website includes details of trade shows that may be of interest to you.