Food service companies face stock crisis

London, UK: Food wholesalers supplying care homes and hospitality sector businesses face having to dump food after schools suddenly closed to most pupils this week. Wholesalers have also been hit by restaurants and pubs closing again.

Philip de Ternant, who runs Creed Food Service he has £50,000 of now unwanted chilled stock. Since April, he’s had to write off £150,000 of food.

De Ternant says some of his own suppliers have offered payment breaks. About 35% of his custom comes from schools, hospitals and care homes. The balance usually comes from hospitality firms like restaurants and cafes, most of which have closed.

During the first lockdown, Creed sold some stock to shoppers struggling to make orders online or who were facing empty supermarket shelves, he says. But now, supermarkets have adjusted their buying and there are fewer shoppers interested.

Mike Morgan, managing director of Savona Foodservice said the school closures threaten about a quarter of his company’s turnover, which is usually about £30m a year.

While sales have collapsed, his costs have not. He’s been able to furlough some of his workers and he and Mr de Ternant praised the scheme. “Furlough helps dramatically but we are a high fixed cost low margin business,” Morgan said. “All these costs have to be borne and I’d be better off shutting my doors.”

Both bosses said their own suppliers, including landlords and vehicle leasing companies, have offered some assistance, but it’s largely delays in payment rather than discounts.

Darren Labbett, who runs Woods Foodservice, which mainly serves upmarket restaurants and venues, has seen his business drop by up to 90%. “Every lockdown our turnover drops overnight,” he said. “The notice you get is none at all.” He says he is particularly frustrated that all his clients receive tax relief in the form of a business rate holiday.

In March, Chancellor Rishi Sunak announced that England’s retail, leisure and hospitality firms with a rateable value of less than £51,000 will be eligible for the tax holiday for a year. All three bosses said a holiday from business rates for a year would help their businesses cope with the losses they are making. They also requested more notice ahead of lockdowns.

“Every single one of my clients got rate relief so it would make sense for us to get it as well,” says Labbett. “It wouldn’t cover all the losses but it would take off the pressure.”

James Bielby, chief executive, Federation of Wholesale Distributors, said: “Despite being incredibly resourceful in helping their hospitality customers transform their businesses to create new offers for the public, such as home delivery, many regional wholesalers are running out of money and time.”

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