New data reveals the damage that increasing energy, goods and labour costs is having on hospitality venues, with nearly two-thirds of hospitality businesses in the UK not currently profitable, according to a new survey conducted by UKHospitality, the British Beer and Pub Association and the British Institute of Innkeeping
The biggest factors behind dwindling finances are the rising costs of energy, goods and labour | Photo credit: Evan Wise
UK Hospitality leaders have called on the government to help the industry tackle current inflationary headwinds, as a new survey finds that only 37% of hospitality businesses in the UK are currently turning a profit.
The survey of approximately 600 hospitality business leaders, including pubs, coffee shops and restaurants, carried out by UKHospitality, the British Beer and Pub Association and British Institute of Innkeeping, indicated the biggest factors behind dwindling finances are the rising costs of energy (74%), goods (55%) and labour (54%).
Almost half (45%) of hospitality businesses in the UK have been forced to reduced opening hours to avoid closing permanently and one in six report having no cash reserves.
Alongside additional support to help the industry tackle current inflationary headwinds, the three membership groups have called for a new tax and investment regime that facilitates a resilient and productive hospitality sector.
“In the past few weeks inflation has hit record levels and costs on key ingredients and utilities has rocketed, whilst consumer confidence has plummeted resulting in fewer customers in our venues. We are weathering a perfect storm, but we can’t hold on forever, we need relief as soon as possible before the cost of doing business forces venues to close for good,” a joint statement from the groups said.
Speaking on the 5THWAVE podcast about the rising cost of operating coffee shops, Chris Ammermann, Director of Operations at London based hospitality chain and specialty coffee roasting business Caravan, said that utility prices are now three times higher than the business was previously paying and that such increases will eventually feed down to the bottom line.
However, Ammermann and fellow podcast guest, Jim Ragas, CEO of Toronto-based The Second Cup Coffee Company, cited labour shortages as another major issue facing coffee businesses.
Ragas said that it is becoming “harder to get people to come back to work and finding people that view working in a café or restaurant as a career”, meaning that coffee chains are having to pay staff more as the supply versus demand balance tilts in employees favour.
UKHospitality, the British Beer and Pub Association and the British Institute of Innkeeping recently reported that staff shortages are forcing one in three hospitality businesses to close one or more days a week, with the industry currently advertising 174,000 and experiencing 83% more vacancies compared to March-May 2019, when the most recent comparable data was collected.