The pressure on food and beverage businesses at the moment is not, for the most part, a pressure of demand. People are still eating out, still buying from the shelves. The pressure is on cost. Wages, food prices, energy and business rates have all risen together, and they have compressed the margins that operators in this sector run on. The result is a squeeze felt not at the top line but in the space between revenue and profit.
When the pressure is on cost rather than sales, the instinct is to shrink. Close a site, defer an investment, hold back a plan. Sometimes that is the right call. But for a fundamentally sound business, the more useful response is often not to contract. It is to reconfigure the funding side, so capital is released from where it sits idle and directed to where it earns the most. This is about how a food and beverage operator can fund its way through a cost squeeze, rather than simply cut through it.
Faced with rising costs, most attention goes to operations: menus, suppliers, rotas, energy contracts. That work matters, and it should be done. But it addresses only one side of the problem, and it has a floor. You can trim a business only so far before you begin cutting into what makes it work.
The other side is the balance sheet. A business under margin pressure often has cash locked up in places that do it no good. It may also carry funding arrangements set for an easier time, which no longer fit the one it is in. Reconfiguring that, releasing the trapped cash and reshaping the debt, can do more to steady a business than another round of operational cuts. It also avoids weakening the offer that brings customers in. Cost pressure, in other words, is as much a capital question as an operational one, and the capital side is often the less exhausted of the two.
It is worth looking at how the largest and best-resourced operators respond to the same pressure. The principle they apply is one an independent business can borrow.
When a major group concludes that a part of its estate no longer earns its keep, it does not simply persist with it. It reallocates. It moves capital out of the formats that return least and into those that return most. Consider one recent example. One of the UK's largest hospitality groups is closing its entire Beefeater estate, more than a hundred restaurants. It was not a business running out of money. It was a well-capitalised group, under significant cost pressure, deciding that its capital would work harder in hotel rooms than in standalone restaurants, and acting on that judgement. Some of the sites are being sold as going concerns, to operators who see a return where the group no longer did.
Whatever one makes of the outcome, the discipline behind it is instructive. Capital is directed to where it earns the best return, and away from where it does not. An independent operator cannot restructure at that scale. But it can apply the same thinking to its own business through its funding, and it does not need a boardroom of advisers to start.
The first place to look is the cash a food and beverage business already has, tied up where it cannot be used.
Two forms are common in this sector:
Both can be released. Invoice finance advances the value of unpaid invoices soon after they are raised, turning a slow-paying ledger into available cash. Asset-based lending can raise funding against stock and other assets on the balance sheet. Neither is new borrowing for its own sake. Each releases money the business already owns, so it can meet costs, hold steady, or invest, rather than sitting inert in the working-capital cycle.
For a business under cost pressure, this is often the fastest source of relief, because the cash is already there. It simply needs to be freed.
The second place to look is the existing debt. A facility can quietly work against a business as its circumstances change. That applies to one put in place in easier conditions, at a different scale, or with a lender who no longer suits.
Refinancing is the tool here. Reshaping existing facilities can:
In a higher-cost environment, the difference between a facility built for the last few years and one built for the next few can be significant. It shows in both the cash it frees and the room it leaves to manoeuvre.
The point is not to borrow more. It is to make sure the debt a business already carries is structured for the conditions it now trades in, rather than the ones it was arranged in.
The third place to look is forward. A cost squeeze reshapes a market, and reshaping creates opportunity for the operators positioned to take it.
As larger groups withdraw from formats that no longer suit them, sites, brands and capacity come onto the market, often at attractive terms and frequently as going concerns. An operator with the funding in place can acquire the locations that fit its model, consolidate, or move into space a retreating competitor has left. Funding an acquisition of this kind, or the growth investment that follows, is how a well-run business turns a difficult market to its advantage rather than merely surviving it.
This is the same discipline the large groups apply, seen from the other side. Where they reallocate away from a format, a sharper independent operator can reallocate toward it, if its funding allows.
At FBX Capital Partners, we are an independent UK debt advisory firm, and we help food and beverage businesses put their funding to work through exactly this kind of pressure. We are not a lender. We are the adviser who assesses three things:
We then reach across the whole market to arrange the funding.
This is a sector we know. We arranged a £6.5m private credit facility for a UK food and beverage manufacturer, funding its expansion into Western Europe. For a business in this market, that is the difference between an ambition held back by funding and one the funding makes possible.
Because we work across the whole lending market rather than a single lender's product set, we can bring the right combination to bear:
We advise on facilities generally in the £1m to £20m range, for businesses of £3m to £30m in revenue. You can see examples of the funding we have arranged in our recent deals.
Rising costs are testing every operator in this sector, but they are not, for a sound business, only a threat. Handled on the funding side as well as the operational one, they are also a moment to release capital, reshape debt, and invest where returns are strongest. If that would be useful to think through, do get in touch with the team. It is a conversation worth having early.
This article is general information about business funding in the UK and is not legal, financial, tax or investment advice. Individual circumstances should be discussed with an appropriately qualified adviser.
By looking at the balance sheet, not just the running of the business. A food and beverage operator often has cash tied up in unpaid invoices and in stock, and carries debt arranged for easier conditions. Releasing that cash through invoice finance or asset-based lending, and reshaping the debt through refinancing, can steady a business without another round of operational cuts. It works on the capital side, which is often the less exhausted of the two.
For a well-run business with the funding in place, a difficult market can be the right moment to grow. As larger groups withdraw from formats that no longer suit them, sites, brands and capacity come onto the market, often on attractive terms and as going concerns. An operator positioned to acquire can pick up locations that fit its model and move into space a competitor has left. It is how a sound business turns cost pressure to its advantage rather than only weathering it.
