The difficulties faced by pubs and restaurants over the past year have been well publicized, but where there are challenges there is also opportunity. With many global lockdowns easing over the coming months, the outlook for restaurants globally is beginning to look a lot brighter. But why exactly is now the perfect time to invest in a restaurant franchise?
The Pre-Covid Restaurant Sector Was Thriving
At the start of 2020, starting a restaurant business or franchise would have seemed like something of a no-brainer. It’s no secret that people love eating out, with data from YouGov showing that in January 2020, 65 percent of people bought food from a restaurant at least once a fortnight.
When the pandemic ends, and consumer confidence starts to grow, there is no reason why the restaurant sector shouldn’t be able to thrive once again.
People are Planning Their Return to Restaurants
Anyone who has lived the past 12 months will likely feel a collective desperation to get back to normal. We want to hug loved ones, laugh with friends and return to living, rather than just existing. Dining is a major part of how we socialize and achieve that feeling of normality.
So, if you are thinking of investing in a restaurant franchise, you should be buoyed by the fact that there will be pent-up demand for eating out.
The good news doesn’t stop there, though. Owing to the fact that the hospitality sector has been badly affected by Covid-19, it has been a top priority for governments across the world to provide incentives and support to restart the industry. In the 2021 UK Budget, Chancellor of the Exchequer, Rishi Sunak set out a number of measures that you could take advantage of if you were to start a restaurant franchise in 2021.
The first such incentive is that hospitality businesses, including restaurant franchises, will pay a lower rate of VAT until at least March 2022. This means that the current reduced rate of 5 percent on goods and services will continue until 30 September 2021, followed by a ‘managed transition’ which will see a VAT rate of 12.5 percent prevail for the following six months.
Businesses in retail, hospitality and leisure, such as restaurant franchises, that operate in England will also continue to receive business rates relief until at least the end of March next year. Until 30 June 2021, businesses in these sectors receive 100 percent business rate relief, followed by 66 percent rate relief until 31 March 2022.
The government has also frozen duty rates on beer, cider, wine and spirits until the end of the financial year, which should provide even greater numbers of customers with an incentive to come to your restaurant franchise.
Similar measures are being put in place by governments across the world to ensure the global restaurant industry continues to thrive.
A Renter’s Market for Commercial Property
While the hospitality and restaurant sector has thrived in recent years, it has been a challenging time for retailers on the high street, with a number of retailers both large and small shutting up shop for good. This has created a challenge for commercial landlords, who need new businesses to fill the space of dormant locations.
Covid-19 has exacerbated the problem for commercial landlords, as fewer businesses are taking on new locations. The Q4 2020 Commercial Property Market Survey by the Royal Institution of Chartered Surveyors showed that 78 percent of commercial landlords have seen a reduced interest in retail space over the last quarter.
This means that there are good deals to be had for businesses that are looking to take up a lease at the moment, so acting now could reduce your overheads for years to come.
Franchises Can Be Flexible
If there’s one thing the past year has taught us, it’s that all businesses must be adaptable and flexible. This is certainly something we’ve seen in the restaurant sector, with many businesses now offering takeaway services and even meal kits. The good thing is that this flexibility will continue post-Covid, meaning that a restaurant franchise can be a great test of your creativity and entrepreneurial spirit.
So, what are you waiting for? With a unique combination of pent-up demand, government stimulus and commercial incentives, there has never been a better time to invest in a restaurant franchise.