After a very difficult year in 2020, 2021 was marked by a slow return to pre-crisis activity levels. The first half of the year, still impacted by health restrictions, was followed by a second year of clear improvement (mainly due to an upturn in activity on the coast during the summer and then in Paris at the end of the year); the situation nevertheless varied according to the departments and the periods observed.
2022 is looking better, despite the threat of a new wave (Covid-19) in September and a probable stalemate in the Russian-Ukrainian conflict.
This upturn has also been noted by ACCOR, the European leader in hotels, which has published revenues of €701 million for the first quarter of 2022 (up 85% like-for-like compared to the first quarter of 2021).
Beyond this improvement, we must nevertheless keep in mind that France's GDP stagnated in the first quarter of 2022, with zero growth. Thus, the generalized rise in prices has weighed heavily on households, whose consumption has contracted sharply. For INSEE, this stagnation is due to a stronger than expected decline in household demand: -1.3% in the first quarter of 2022, compared to +0.6% in the fourth quarter of 2021. Faced with inflation and the threat of conflict on Europe's doorstep, households have sharply reduced their spending on hotels and restaurants (-5.3% after +0.9%).
During this period, many hotel and restaurant owners have noted that the volume of their business has exceeded last year's level, while fearing a more delicate September (possible return of the pandemic). The balance is therefore precarious...
In this very particular context, the dilemmas facing the sector are multiple. Indeed, how to combine the increase in the price of raw materials, energy, transport, packaging... with the satisfaction of customers, and that of employees expecting significant salary increases. The challenges are numerous with the increase in final prices for customers, the problems related to recruitment and the crisis of vocations (observed for a long time), the lack of housing for seasonal workers... Without forgetting in the background, the purchasing power of the French strongly damaged these last months.
Employment: a plethora of offers that do not find takers
The difficulty of attracting talent in the hotel and restaurant sector is very real. The employers, in agreement with the trade unions, have recently agreed to a salary increase of 16.33% on average in the restaurant industry. But will this be enough?
Many restaurant owners hope that this new salary scale will attract the younger generation to a profession that is finding it increasingly difficult to recruit. Paid at the minimum wage, some employees should now receive a salary 5% higher than the minimum wage (around 60 euros).
For its part, the government has announced a tax exemption for tips paid by credit card. A little help that does not make us forget the problem of the arduousness and the shifted hours...
Many restaurant owners agree that with the health crisis and recruitment difficulties, it is not always easy to pay employees their fair value. Physical job with long hours, employees are often forced to accept a rhythm of life far from easy to manage. Between breaks and overtime, they must constantly adapt to the irregularity of customer flows.
Another major problem is that finding seasonal housing (especially in the seaside resorts) is becoming almost impossible. With rental prices soaring and wages relatively low, a few employers still offer a solution to their seasonal workers.
But because of the lack of available accommodation, many employers are giving up recruiting, thus losing a potential turnover...
Another indirect impact to be taken into account: telecommuting, which is still widely practiced, has deprived the restaurant industry of a significant number of customers, a phenomenon that is more or less marked depending on the day of the week.
What about the 120,000 vacancies in the restaurant industry? Many people have turned away from the sector to other jobs where the work is less arduous and the pay is higher. Fewer and fewer applications are reaching restaurant owners... Thus, the lack of personnel often rhymes with the loss of turnover.
In this environment where candidates are becoming increasingly rare in the hotel and restaurant industry, the opening of negotiations between France and Tunisia is causing some controversy ...
Commodity price inflation does not spare the sector
Other factors are making the situation worse. Commodity prices as a whole are at their highest level in over 10 years.
The food industries are facing major challenges... Numerous tensions are impacting the supply markets for agricultural and industrial raw materials. Added to this context are the uncertainties of the Russian-Ukrainian conflict. The price index of all raw materials in euros has increased by more than 35% over the period 2010-2021... All of this can have a lasting impact on the economic health of the sector.
The latest figures from INSEE show that the past year has been marked by a sharp increase in the price of food raw materials (+41% over the past 12 months). The price of oil, fish, flour and poultry (currently bird flu) is soaring. This is a headache for catering professionals who must maintain balanced budgets without discouraging customers by raising prices.
Thus, in 2021, price increases were considerable: meat (+ 44.5%), seafood (+ 39.5%), oilseeds (+ 24.8%). Grain prices rose 27.2% from November 2020; corn and wheat prices moved with similar increases. The price of dairy products rose 1.8% in December and over the year, 17.4% compared to 2020. And what about sugar with +11.3% in 2021. Let's not forget the price of pulp, which rose 12% in December and 33% over the year 2021. These increases in packaging products, combined with those of industrial materials, show the tension that exists at the beginning of 2022. In the packaging sector, all products have seen price increases, particularly plastic (+20%) and cardboard (+18%) packaging. In addition, the price of aluminum has risen by 24% according to figures from the London Metal Exchange (LME).
In fine, the packaging, wrapping, leaflets... used by the professionals of the sector are therefore impacted.
Choosing the right supplier channels is more vital than ever
In this context, the choice of suppliers and sourcing must be reviewed. Sourcing is indeed a crucial step for the sustainability of a restaurant, by integrating the essential steps: selection of suppliers, forecast of orders, orders to suppliers, follow-up, control of deliveries upon receipt (quantity, sanitary quality...). Usually, wholesalers, wholesale markets such as the Min de Rungis, professional brands (Promocash, Métro...), markets, cooperatives, online platforms remain the main interlocutors of the restaurant owner. Thus, particularly since the first containment, the use of more local supplies has increased... Thus, partnerships with breeders, market gardeners, farmers are developing more and more.
All this should also push restaurateurs to rethink their menu according to seasonality and alternative products (which can be substituted for others that have become difficult to access), or else a restaurant's operation will be in trouble.
Who will take this inflationary shock? The customer, the hotel and restaurant owner, the State or all three at once?
Faced with the energy inflation caused by the war in Ukraine, the government has not skimped on the means to cushion the blow... 30 billion in aid. It seems unthinkable to be able to renew such a level of contribution every year. One figure catches the eye: 2813.1 billion euros. This is the amount of our public debt, at the end of December 2021, or 112.9% of GDP. In absolute terms, this debt has increased by almost 165 billion euros!
In April, consumer prices rose by 0.4% in one month and 4.8% in one year. Inflation could reach 5% in May, then 5.4% in June. Food prices are expected to rise sharply: +6.3% in June. In the absence of the tariff shield and the 18 cent discount on fuel prices, INSEE estimated that inflation would have exceeded 7% over one year, in the current month.
The operating margin having become low, saving is no longer sufficient for many professionals who are therefore forced to increase their rates; customers, who are also constrained in their purchasing power, seem to be understanding to this day.
The Union des Métiers et des Industries de l'Hôtellerie (UMIH) claims that a quarter of cafés and restaurants have increased their prices. Also according to the UMIH, 81% of professionals prefer a reduction in taxation, including the TICPE (Taxe intérieure de consommation sur les produits énergétiques), to financial aid.
Today, the priority seems to be to find the right balance in a considerably worsened context: how to continue to invest while paying back the EGPs, and creating added value to ensure the sustainability of their businesses. This is a difficult equation to solve for the hotel and restaurant sector.
