It has emerged that hundreds of jobs are under threat at Brakes. The foodservice giant says it is having to restructure in the wake of the coronavirus crisis. Even as the hospitality sector gears up to reopen early next month, Brakes boss Hugo Mahoney has warned that the recovery is likely to be slow, while it will also be operating in a smaller marketplace than before the lockdown, citing the collapse of a number of casual dining chains already. 

News that Boris Johnson has ordered a review of the two-metre social distancing guidance will provide some hope for hospitality operators and the wholesalers that supply them, that many businesses will be able to come back in a meaningful way. However, the Brakes bombshell this week shows that foodservice wholesalers need far more support than they are currently getting from government.

Brakes’ move comes just weeks after a Federation of Wholesale Distributors survey, commissioned by Defra, found 51% of wholesalers feared collapse before the end of the year. Of these, the vast majority were smaller foodservice operators with annual sales of less than £50m. If the impact of this crisis has been so severe on Brakes, with its £4.2bn turnover, then it is clearly potentially even more catastrophic for many smaller players.

Of course, wholesalers have been telling this to anyone willing to listen since the crisis began in March. What is shocking is that calls for government support have so far failed to deliver any sector-specific support, which many wholesalers believe could save their businesses.

So what do wholesalers want? And crucially, why are they not getting it?

The FWD has called for a raft of measures since lockdown was announced on 23 March.

These include extending the Retail, Hospitality and Leisure Grant Fund to wholesale; asking for financial support with higher utility bills incurred from freezing surplus stock; more affordable loans to help wholesalers prepare for the restart; and extending VAT bad debt relief to excise duty.

The FWD has been lobbying hard in Westminster and Whitehall, including daily dialogue with Defra as part of that department’s focus on maintaining the food supply chain during the crisis. Defra secretary of state George Eustice is understood to be sympathetic to the sector’s needs but of course he doesn’t hold the purse strings and as such lobbying activity has now switched to the Treasury and Chancellor Rishi Sunak.

The primary demand from wholesalers has also now shifted to an extension of business rates relief (BRR) to include wholesalers.

FWD estimates the move would provide a £125m boost to the sector. BRR already benefits retail businesses including supermarkets. “It is ridiculous that the government have provided blanket business rate relief for retail and hospitality but not the sector that supplies to these industries,” says FWD chairman and Country Range Group MD Coral Rose.

BRR would help Country Range members to the tune of £2m a year, Sugro wholesalers would benefit by £1.5m and Confex’s 206 members would recoup £20m.

“This would be the best way for the government to avoid mass redundancy across our wholesalers as they restructure with an estimated 1,000 jobs at risk in July,” says Confex MD Tom Gittins.

So far, FWD has convinced 52 MPs to rally to its cause. A cross-party letter to Sunak has been signed by 31 parliamentarians, including former Conservative party leader Iain Duncan Smith and former Labour shadow Chancellor John McDonnell.

“If the situation continues this will dramatically impact the food supply chain and the most vulnerable in our society, such as those in poorer communities and rural areas, and others providing essential services at this time will be unable to access the most basic catering needs,” it says.

“Failing to include food and drink wholesale in this list is a clear anomaly given that this sector is a key part of the food and drink supply chain to those businesses.”

A further 21 MPs have written individually to the Chancellor, voicing the same concerns.

“So far we have the support of 50 MPs who agree that our members have fallen through the cracks and have joined us in lobbying for this financial measure, which will be a lifeline to many businesses and be the difference between staying open and collapse,” says FWD CEO James Bielby.

“Offering business rate relief could amount to tens of thousands if not hundreds of thousands of pounds for some members. Without significant support for its distribution network, our members’ customers cannot recover as quickly as they or the Treasury would wish, which will delay economic regeneration, at a cost of job losses and business failures. Immediate investment in the supply chain is essential for the smooth and swift recovery of the hospitality sector.”

In response, the Treasury told FWD it wanted to “reassure you that we do recognise the difficulties that wholesalers are facing and we are still keeping the existing measures and broader tax system under review”.

It said it had “passed the suggestion of business rates relief on to relevant colleagues, who are also aware of the challenging situation that wholesalers are facing”.

When questioned by The Grocer, a Treasury spokesman pointed to the “unprecedented action at speed to support businesses, jobs and our economy”.

“This includes 100% government-backed loans worth up to £50,000, supporting furloughed workers’ wages, tax deferrals and eviction protection.

“The government continues to review the economic situation and consider what support businesses and other organisations need.”

The Treasury may well recognise wholesalers’ issues – the question is what further measures will it take to intervene? Hopefully the difficulties demonstrated by Brakes, one of the sector’s biggest and most successful businesses, might just help translate these supportive words into decisive action.

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