In many respects Scotland’s hospitality industry defines us a nation. We cannot escape from the fact that visitors and our own citizens enjoy what we do best. A warm welcome, our unique offering of food and drink, and memorable places to stay where we relax or indulge in some energetic outdoor experiences.
But underlying this ‘soft power’ economic offering, there are some hard times and tough decisions about how to survive in this business environment. The best Scottish food companies can still attract international interest. This is exemplified by Sysco, the American food giant, devouring a well-known and respected food company which began life in Edinburgh.
Sysco has acquired Scottish specialist meat supplier Campbells Prime Meat for an undisclosed sum. Sysco Corporation, founded in 1969, is together with its subsidiaries the largest global distributor of food and related products primarily to the foodservice or food-away-from-home industry. The company had massive $78.8bn of sales in 2024. Gross profits for the first quarter of 2024 were $3.8bn. So the purchase of the Linlithgow-based meat business, which started as a family business nearly 60 years earlier than Sysco’s foundation, is no more than a tasty morsel.
Campbells employs 325 people and supplies customers across the UK via its online service. The company recorded a turnover of £69m and made a pre-tax profit of £4.1m for the year ending 31 December 2023.
“We are delighted that Campbells Prime Meat will be joining Sysco GB – it is a great business with a fantastic reputation for producing high-quality meat, fish and deli items, combined with exceptional levels of service and championing independent customers in Scotland,” said Sysco UK chief executive officer Paul Nieduszynski.
Campbells’ chief executive officer Christopher Campbell said: “Over the past century, we’ve worked tirelessly to build a reputation as the leading catering butcher in Scotland, and we’ve been impressed at how Sysco wants to support and encourage us to continue that journey.”
Campbells’ sale is exactly the kind of deal that is making Scotland’s food and drink sector one of great interest in 2025.
Andy Ley, Partner and lead of Addleshaw Goddard’s food and drink team in Scotland, who was involved in this deal, says: “The food and drink sector is facing opportunities and headwinds in equal measure. From an opportunity perspective, given the scale of the sector and the level of its energy consumption, the sector is well placed to play a key part in the transition to sustainability and net zero and remains one of the key drivers of Scotland’s GDP.”
He says it also continues to have a world-renowned reputation for quality and has probably under-performed over recent years on its potential to attract investment – all of which presents significant opportunity.
“On the flip side, regulatory changes (such as the extended producer responsibility and the re-emergence of a UK-wide deposit return scheme) can be expected to have a major impact, as can increased National Insurance costs and the prospect of additional trade tariffs in the US under a Trump administration.”
We take this sector for granted at our peril and must do all we can to support it,” says Andy Ley
On a more local level, many former offices and retail units are now granted consents to transform into new restaurants and bars, and listed buildings are being converted to give them a new lease of life. This has allowed new entrants such as Flight Club, Margo and Gleneagles Townhouse to make waves in the Scottish leisure market, redefining the hospitality scene.
Fiona McKinnon, partner and commercial real estate lawyer at Anderson Strathern, says: “Most landlords are willing and supportive of change of use for many of these buildings, with operators of restaurants often still keen to take longer leases of 15 to 20 years. This ensures good return on landlord investment.
Most landlords are willing and supportive of change of use for many of these buildings, says Fiona McKinnon
“We are also seeing plenty of cases in which licensing boards are granting new premises licenses to high-end restaurant operators of premises that previously were not licensed, which should grow confidence in the sector,” she says.
Locations in areas where there is high footfall of visitors and tourists, in central Edinburgh and Glasgow, are helping to change the street vibe.
“The changes in attitude to restaurant space, the refurbishing of listed buildings and different spaces, it all creates opportunity not just for restaurateurs, but for landlords and investors alike,” McKinnon says.
Then there is the so-called ‘tourist tax’, which became law in May this year. The Scottish Visitor Levy is expected to be implemented in the spring of 2026, but it will have repercussions for visitors, hotels and short-term letting.
“The first question businesses will have is: who does this apply to? In essence, the tourist tax is a transaction tax that is charged on the provision of overnight accommodation,” says Caroline Colliston, executive partner for Scotland at DWF.
This legislation applies to any room or area provided to a visitor for residential purposes for a period of at least six hours. This includes hotels, hostels, bed and breakfast accommodations, caravan parks, and even campsites, but excludes visiting cruise ships.
“The levy will impact the entire hospitality sector, including private landlords and providers of holiday lettings,” Colliston says.
And employers will have yet another unexpected issue to tackle. Debbie Fellows, employment partner at Thorntons, says changes to tipping could create problems when it comes to weekly wages being paid.
“Following new legislation which compels employers to pass on all tips, gratuities and service charges over which they exercise control or significant influence, and prevents tips from being included in pay, hospitality employers must ensure they have clear policies in place which are transparent and fair.”
Fellows says many establishments will choose to share tips evenly among all staff, from kitchen to front of house, while others may choose an alternative approach such as basing the amount awarded on experience or level of seniority within the business.
“Whichever distribution model employers choose, they should be aware that they could be open to legal challenge if other staff disagree with it and deem it unfair. Employers can help to prevent disputes by having a fair tipping policy that all employees are aware of, introducing additional training if necessary and keeping robust records of tip allocation.”