Deliveroo reveals 1 in 5 sites shut early due to supply chain issues & staff shortages

New polling of restaurants from Deliveroo has revealed the extent to which supply chain problems and staff shortages are stifling the economic recovery across the hospitality sector.

In a survey of small and independent restaurants on its platform, Deliveroo found that one in five partner restaurants had been forced to close their doors during business hours over the past three months because of supply chain issues.

Supply chain difficulties are causing widespread problems across restaurant operations. Of the restaurants polled, 54% have had to remove items from their menus due to lack of availability, whilst nearly half have had to increase prices. For core ingredients, 89% of partner restaurants have seen wholesale costs increase and the majority (55%) agree that managing their supply chain has become more difficult over the past six months.

At the same time, nearly two thirds of partner restaurants report being understaffed. The problem is becoming more acute too, with 30% of respondents saying they have fewer staff than 6 months ago. The overwhelming majority (79%) have described recruiting more staff over the past three months as ‘challenging’.

As a result of staff shortages, 18% of partners have had to shut their business when they’d otherwise be open, while two in five have been forced to change their operations such as rejecting bookings or limiting opening hours. Restaurants are also having to increase salaries across a range of jobs to attract staff, with 90% raising the wage levels of chefs.

While restaurants have faced a range of challenges since the start of the pandemic, food delivery has allowed them to keep trading and reach new customers whilst their dine-in operations have been restricted. Even with social distancing restriction easing, delivery has continued to play a vital role in boosting their revenue.

In Q3, Deliveroo saw a year-on-year order volume increase of 59% and, in a sign of the customer demand for delivery, Deliveroo now serves every UK town with a population of over 50,000. As Deliveroo moves into more locations, more restaurants benefit from being able to serve customers through online delivery.

However, due to the rising cost pressures faced by restaurants on staff and supplies, Deliveroo is supporting UKHospitality’s campaign calling for the Government to commit to a permanent 12.5% rate of VAT for hospitality.

Carlo Mocci, Chief Business Officer UK&I, Deliveroo, said, “While the economy has opened up and restaurants can welcome back dine-in guests, they’re facing the twin pressures of rising prices and staff shortages. We are pleased to be able to provide a lifeline through our delivery network.

'Restaurants are a vibrant part of our local communities and critical to the economic recovery, so no-one wants to see them forced to turn away dine-in customers. Making the VAT cut permanent for hospitality will go a long way in easing the financial burden, protecting jobs and livelihoods.”

UKHospitality CEO Kate Nicholls, said, “With fragile consumer confidence further damaged by the impact of the new Omicron variant, at the start of what should have been a key trading period for the sector, on top of ever-rising costs, chronic staff shortages and ongoing supply chain issues, the Government needs to act to support hospitality businesses.

'The best option for the Government would be to retain the 12.5% VAT rate for hospitality and tourism, to allow businesses to invest in staff and skills, keep trading back to prosperity, helping the wider national recovery and keep prices affordable for consumers.”