Two-fifths of hospitality firms ‘operating at a loss’

Over two-fifths of UK hospitality businesses are operating at a loss, and 70 per cent are set to increase prices in the coming year. 

That’s according to a new survey of 250 senior decision-makers within UK hospitality businesses by Peckwater Brands. 

The survey found that as many as 44 per cent of businesses are operating at a loss, with 53 per cent impacted by the rising cost of goods and 50 per cent by higher energy bills.

Some 70 per cent feel they will have to increase prices to survive, while a third (34 per cent) do not think their business will make it through the the next 12 months.

A third (34 per cent) are struggling with higher interest rates, while 29 per cent struggle with increased commercial rents. Most (55 per cent) are struggling to find enough staff to operate effectively.

Inflation is not just ramping up hospitality businesses’ costs – the majority (70 per cent) say customers are spending significantly less than they were 12 months ago too.

Tough conditions

Sam Martin, CEO of Peckwater Brands, said: “Conditions for hospitality businesses are undoubtedly tough, with record food inflation, skyrocketing energy bills and falling consumer spending all having a notable impact. Our research lays bare the stark reality; so many establishments are loss-making and many fear for their survival.

“Unfortunately, the challenges facing the hospitality sector will not disappear any time soon. Raising prices might be the only option available to many businesses, but with consumers wrestling with a cost-of-living crisis and seeking out lower prices wherever possible, this action could damage their customer bases.

“Just as during the pandemic, hospitality businesses must rely on ingenuity, efficiency and innovation to survive, let alone thrive – they must seek out all opportunities available to them, whether that is to lower costs or find ways of boosting revenue and order volumes, such as improved marketing or operating secondary virtual food brands out of their kitchens.

”One can only hope that in the coming months, inflation falls sharply and overheads drop, ensuring hospitality firms are not forced to close their doors. If they were, local high streets would be greatly diminished, as would the UK economy.”