The hospitality sector is currently facing a challenging period, with numerous businesses reporting declines in bookings and sales. The prevailing cost of living crisis is a significant concern, as consumers plan to reduce their spending on hospitality in the first quarter of 2025. According to a Deloitte survey involving 3,000 respondents, many consumers intend to spend less on hospitality compared to the previous year. Despite a 25% increase in discounts offered in 2024, the trend of reduced consumer spending persists.
Industry leaders are raising alarms over the impact of rising employer National Insurance contributions and minimum wage hikes. These financial burdens threaten the survival of many businesses within the sector. A staggering 80% of businesses are contemplating staff reductions as they grapple with increased costs. Sonia Johnson, a business owner in the industry, highlighted that staffing expenses, already the largest cost for many, will become "quite high" due to the minimum wage rise.
Mohammed Sarnwal, a restaurant owner, expressed concerns about rising supplier prices, which compel him to raise menu prices to cover escalating costs. The expectation of further supplier price hikes in the coming months adds another layer of financial strain on businesses. The industry urges the government to reconsider its policies on National Insurance contributions and minimum wage. Kate Nicholls, Chief Executive of UK Hospitality, has called for an "urgent rethink" of these changes.
While the government has announced a cut of 1p off alcohol duty on draught pints starting February and a 40% relief from business rates for some establishments from April, industry experts warn that these measures may not suffice. The sector anticipates a tough year ahead, with many businesses cautioning that they may not survive under current conditions.
"It's quite worrying. I've never seen a situation like this in my 18 years of the hospitality industry."
Videos showcasing empty bars and restaurants have been trending on TikTok, with staff using the hashtag #JanuaryInHospitality. These visuals underscore the quiet period experienced by the industry. Louise Maclean, a commentator on the situation, observed that businesses across the board are having to "rein it back in."
"Everywhere is having to rein it back in." – Louise Maclean
Furthermore, some voices in the industry criticize the government's approach, suggesting that their actions may inadvertently harm the sector.
"doing itself no favours – if they want to destroy the hospitality industry they're going the right way about it."
A government spokesperson responded by emphasizing their support for the industry through measures like cutting alcohol duties and providing business rate relief.
"standing behind" hospitality by cutting 1p off alcohol duty on draught pints from February, and was giving some restaurants, pubs and bars 40% relief from business rates from April. – Government spokesperson
Despite these efforts, the hospitality industry continues to face significant challenges. The combination of reduced consumer spending and increased operational costs poses a daunting outlook for many businesses. With staffing reductions on the horizon and rising prices becoming unavoidable, industry leaders remain vigilant and hopeful for more comprehensive government intervention.