How hospitality can beat a decade of rising costs
Pub, bar and restaurant owners can beat a decade of rising costs by taking “a more strategic approach” to operations and supplies, according to insight from inflation experts.
The advice, which was gathered following new data being made available from Dojo’s UK Inflation Index, revealed that operating costs have increased by an average of 48% across the hospitality sector in the last 10 years.
Describing how to navigate the challenges, Charlie Ashworth, head of research and insights at payment provider Dojo, said: “While operating costs have risen significantly over the past decade, with the right insight into their cost structure, businesses can be better equipped to respond to these pressures.”
‘Opportunity lies in control and efficiency’
Ashworth explained that “for business owners, the opportunity lies in control and efficiency. With labour, energy, insurance and technology costs all contributing to long-term structural change, understanding where your exposure sits is now a strategic advantage”.
The research also identified training costs as one of the fastest-rising operational expenses across the sector. Meanwhile, employee retention is falling, with only one in four staff making it past the first 90 days, adding increasing pressure to already tight margins.
The data revealed that, in fact, training costs have increased by an average of 70% for hospitality businesses in the past decade, with catering companies seeing the highest increase of 80%, followed by hotels at 71%, and pubs and bars at 60%. The findings outlined that what this does is it creates additional pressure for hospitality businesses, which often invest heavily in training employees who leave before that investment can deliver long-term value.
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‘Protect margins’
Additionally, hospitality business owners should look at “reviewing supplier contracts, improving operational efficiency, reducing unnecessary overheads, and optimising payment systems can all help protect margins in a higher-cost environment,” he suggested.
According to Ashworth: “With increases of this scale, businesses must take a more strategic approach to operations and managing their supplies.”
With this in mind, he insisted that “understanding the supply chain is critical, and business owners should really look into how much they pay per item and whether there are more competitive suppliers available without compromising quality”.
Ashworth also hinted that “another option is to investigate how usage can be reduced, or processes improved to minimise waste”.
How to make a ‘meaningful difference to overall profitability’
He noted that “in times of sustained inflation, careful supply management can make a meaningful difference to overall profitability”. Plus, Ashworth also highlighted the fact that “businesses that regularly assess their operating model, adapt pricing strategies where possible, and invest in tools that streamline transactions and reduce friction are often better positioned to absorb cost pressures without compromising service or growth”.
Ashworth added: “The past decade shows that the cost of running a business has evolved. The next decade will reward those who evolve with it.”
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