Extra support needed for hospitality and foodservice sector’s “squeezed middle”

As the Government considers how to reopen the hospitality and foodservice sector, industry experts are warning that the “squeezed middle” has been overlooked in COVID-19 recovery plans.

That’s according to a new report from the Food and Drink Industry Round Table, which brought together more than 20 organisations from across the farm-to-fork supply chain, including the Food & Drink Federation, British Frozen Food Federation, Federation of Bakers, British Produce Consortium and the Wine and Spirit Trade Association. The report claimed that less than half of food and drink manufacturers have applied for the Government’s Coronavirus Business Interruption Loan Scheme or Bounce Back Loan Scheme, owing to fears of additional debt and associated interest payments.

The report also noted that companies face up to 50% of their customer base delaying payments or not paying outstanding invoices.

Whilst many in the industry have been given assistance by the Government as a result of the impact on business during the pandemic, the report claims many food and drink suppliers to the hospitality and foodservice sector haven’t received the same level of support as the businesses that they supply, despite being hard hit by overnight closures back in March. It claims this “squeezed middle” will need vital support if the hospitality sector is to succeed when it reopens.

The report outlines various practical measures the Government can introduce to ensure the hospitality restart is successful. Steps include continued furlough support past October and a scheme for SMEs and micro businesses to provide initial cashflow injections for those that require support to secure orders to meet customer demand.

“Throughout the pandemic, the food and drink industry’s hidden heroes have been working hard to keep the country fed,” Ian Wright CBE, chief executive of the Food and Drink Federation, said. “But those companies who supply the foodservice and hospitality sectors have seen their business disappear overnight, and yet have not been afforded the same Government assistance. The hospitality and foodservice sectors will play a vital role in contributing to the UK’s economic recovery, but any restart will be stymied without further support for those food and drink manufacturers operating in the squeezed middle.”

Richard Harrow, chief executive of the British Frozen Food Federation added: “Many of the ‘squeezed middle’ are often successful family owned SMEs, supplying the hospitality and foodservice sectors, and are now facing collapse. Support for this important sector is vital to ensure they continue to manufacture and supply world leading products, making the market so dynamic and vibrant. Their continued existence will be critical as the economy starts to recover.”