Leisure and catering sector struggles with high cost of materials, says report

24th March 2010, 10:13am

Small and medium-sized enterprises in leisure and catering are struggling in the face of high materials costs and fears about the future of consumer and business spending, according to a report issued today.

The GE Capital report, which is based on interviews with 500 UK SME owners managers conducted during March, shows that 45% of companies in this sector, see high raw materials and inventory costs as one of the three biggest limitations on their success.

The worry over costs was almost as high as the fears over the health of consumer and business spending in the UK, which over half (54%) of SMEs in this sector identified.

• 54% say fears about consumer and business spending
• 45% of companies see high raw material and inventory costs
• 39% say the increased burden of regulation
• 24% see price of fuel as one of biggest limitations

John Jenkins, UK CEO, GE Capital, said: "As the country teeters on the edge of a fragile turnaround the Government must deliver a robust budget in support of the UK's leisure and catering firms if it is to avoid stifling their recovery.

"With 24% of the firms in the sector still saying that they will shrink this year, it is vital that Government continues to focus on maintaining the right conditions to support growth. Top of the list will be ensuring confidence in sterling so that interest rates can remain low. In addition the Government should take further action to reduce the burden of regulation and limit the impact of rising fuel costs, including the proposed increase in fuel duty planned for later in the year."

Additional cost-focused worries include the increased burden of regulation (39%) and the price of fuel (24%) – with the duty on fuel due to rise again on the April 1st.

Reassuringly, less than one in ten businesses (7%) in the leisure and catering sector put a lack of available investment as one of their top three growth challenges. This compares favourably with research pre downturn (2007) when 8% put it in their top three.

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