‘Let’s keep our restaurant bubble afloat’

Last week, Bristol welcomed an article on Bristol24/7 addressing the question: “Is Bristol’s restaurant bubble about to burst?”. So what is going on?

Well, perhaps the continued increase is part of a bigger picture move away from the chains in favour of local, independent businesses. To make a restaurant sustainable in the long term, they needn’t be thinking about rushing into becoming a chain, and instead focus on integrating the business into the local economy – creating strong local supply chains and building up loyal customer bases.

The UK has grown used to chains being the new normal, but in many parts of Europe independents still dominate the food scene. So as we push back the chains in Bristol and the local economy continues to grow it follows that more wealth will be available for continued expansion in the sector.

Developing a strong local supply chain for any business helps to boost the local economy, creating a virtuous circle of trade. And it’s not just small independent businesses that are seeing the benefit of this change. Bristol City Council, spurred on by the Social Value Act, have increased their spend with SME businesses to close to 40 per cent of their annual £350 million spend, and an increasing proportion has been with businesses in the BS1 to BS16 post code areas. And the council names the Bristol Pound as a way to meet Social Impact goals.

The evidence is clear: spending money with locally owned small to medium sized firms can lead to much greater retention of wealth in the real economy, because these firms typically spend a greater portion of their income on local wages and with other local businesses rather than using off-shore tax havens and paying distant shareholders.

Work conducted by the Centre for Local Economic Studies in the UK and other research in the USA have repeatedly indicated that the local re-circulation of money received by local firms is three or four times greater than money spent at major chain. In the UK, a recent CPRE report on local food systems declared that “pound for pound, spending in smaller independent local food outlets supports three times the number of jobs than at national grocery chains: outlets selling significant to high percentages of local food support on average one job for every £46,000 of annual sales by comparison at three national chains one job is supported per £138,000 to £144,000 of annual turnover.”

In Derby, the local authority claims that up to 90 pence of a pound spent in a supermarket leaves the region and similar claims have been made elsewhere. A Bristol Pound, or a local credit once created and spent, continues to circulate in the local economy in its entirety. It locks in the local multiplier. For this reason, the Bristol Pound is a genuine systemic intervention which creates more wealth in the region.

Local currency schemes such as the Bristol Pound can be the facilitators of change that drives the resilience to the local economy. With over 800 businesses signed up to take the Bristol Pound, there are not many things that businesses cannot buy from each other. The city council are part of this circle of trade by accepting Business Rates in Bristol Pounds and then spending them on through their procurement process; in fact, businesses tendering to the council will receive an extra 10 per cent value to the rating of their bid.

Naturally you need customers, but local businesses selling local products employ local people, which engenders loyalty – people know people who work in the supply chain of their local shops and restaurants. Businesses that accept Bristol Pounds tell us that Bristol Pound customers are very loyal and shop with them more regularly than Sterling customers.

We hear a lot of talk about food miles and the damage that moving food around the globe is doing to the environment. Developing a local supply chain for a restaurant business guarantees fresh, regular ingredients and a local supplier can react to changes in demand far more quickly than a supplier in continental Europe can.

Concentrating some of your business efforts on a good local supply chain will pay dividends and help you to grow your business. Local suppliers are not only more knowledgeable, but they will also offer better terms, know the local market, promote your business (as it is their interests to do so), and they will grow with you and for you.

Yes, there is a limit to the expansion of any sector in the economy and to the size of the economy in a finite world. Many start-ups come and go. But, what we can create on the ground in Bristol is a very different future – a much more supportive culture for independent businesses. Today many people are realising that experience of life and connection with others trumps owning more stuff that you don’t need.

As we spend less on imported goods there is more to spend on other things. There are now more options in Bristol to spend at an independent business, which are far more likely to be spending that money again locally. This is the local multiplier effect and businesses that use Bristol Pounds lock this in with their customers. There is no loyalty scheme that goes this extra step and it is a powerful tool to ensure the wealth we create in the city goes towards making a better life for all in Bristol.

Ken Simpson is the business relationship manager at the Bristol Pound and the chair of the Bristol
branch of the Federation of Small Businesses.