The Impact Of Rising Costs On Your Hospitality Business
The hospitality industry, specifically those in the food and beverage sector, is always competitive and extremely vulnerable to outside circumstances – meaning success can be challenging to accomplish.
In the past few years, businesses within the industry have struggled with challenges regarding closures during the pandemic and, more recently, the growing costs of stock. This ongoing strain can make it feel difficult to thrive in the wake of these rising costs and other factors.
In this article, we take a closer look at this ever-changing situation, and how the support of hospitality commercial experts can help you, more, and can equip you with a full financial narrative, offer effective structure and advice to ensure survival, and allow you to flourish despite the adverse climate.
Changing VAT Rates
During the COVID-19 pandemic, there was a concentrated effort by the government to ensure that the hospitality industry survived this troubling time.
As part of this attempt to ease the strain of closed restaurants, hotels, and more, VAT was lowered to 5%, then increased to 12.5% to improve finances. However, as businesses return to normal, VAT has risen back up to the 20% rate, creating a fresh financial concern. Not only that, but those in the hospitality industry have been required to pay an increased minimum wage since April 2022 in line with a rising cost of living and with another minimum wage increase coming in April 2023. This has created the need to be more efficient, even more vital, and operate with a lean budget.
Supply Chain Challenges
Not all the challenges are connected directly to the COVID-19 pandemic, but to other important world events.
There has been an increasing amount of disruption in the supply chain due to a variety of reasons, most recently the ongoing conflict in Ukraine resulting in shipping problems across Europe. The energy and petrol markets have also become very volatile, with costs jumping and fuel supply being called into question. Many food and drink-based businesses have reported costs rising as much as 17% due to Brexit, and the UK transitioning out of the EU. This is higher than the 7% average reported in other industries, showing just how badly impacted the hospitality industry has been in many different ways.
How To Increase Restaurant Profits With The Engine Room
Are you opening a restaurant or hoping to protect and evolve an existing business? The current climate is tight as we have outlined in the few examples above, offering very little room for error despite how exhausting recovery has already been.
You may be struggling to find ways to maximise your commercial opportunities, reduce waste, and save money without cutting corners.
The Engine Room is here to help you through these difficult times, helping you to plan for the present and the future, increasing your restaurant’s profitability, and letting you focus on other elements of your work. Beyond just restaurant consultancy, we offer a viable way for businesses to access top-end commercial services that can be ongoing in your endeavours at a value price, without the need for employment, and with ROI.
Contact The Engine Room today.
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