Looking ahead - what's in store for Hospitality in 2023?

Ollie Brand
Supply chain

With 2022 drawing to a close, I’d like to share a retrospective of the last 12 months as well as set out some of the trends I see in hospitality in the year ahead.

With 2022 drawing to a close, I’d like to share a retrospective of the last 12 months as well as nail my colours to the mast and set out some of the trends I see in hospitality in the year ahead. I’m not going to recap my predictions from last year (you can read them here), but, I must admit that I didn’t foresee 2022 being as turbulent as it has been; and certainly could not have predicted Russia’s invasion of Ukraine and the havoc this has wreaked globally on supply chains and price inflation.

Retrospective - the top struggles for hospitality throughout 2022 The biggest challenge impacting the whole sector has undoubtedly been people shortages. The inability to fill vacancies from the kitchen through to front of house has led to businesses rethink their operating model, including reducing opening hours and implementing robust staff retention strategies. The increasing inflationary pressures around food and fuel have also been a major challenge, along with supply chain fragility.

Ultimately, people are having to do more with less and it’s becoming more difficult to balance a viable business against high costs, without sending your income-squeezed customers running for the hills. There are currently 174,000 open roles across the hospitality industry (ONS June 2022), and a perfect storm of Brexit, post-pandemic demographic shifts in the working population, along with geopolitical struggles have been major contributors to this.

What are we hearing from our customers? We’ve been out on the road spending time with our clients, seeking to understand their biggest challenges at the moment. And their key issues align with the challenges I’ve outlined above.

There is a palpable air of concern in the retail hospitality space as we head into 2023. Any business that serves the high street customer, knows the cost-of-living crisis is going to kick them hard, and this is likely going to be felt even more once the football world cup and Christmas are over. That said, coffee shops seem to be swimming against the tide. Likewise in the contract catering space we note a quiet confidence, perhaps comforted by the reality that everyone needs to eat, and there will be opportunities for this sector as more locations look to outsource their catering and businesses use it to lure employees back to the office. This does not mean they are not affected by inflation and the onus is on contract caterers to address the challenges and guide their customers; they need to be more innovative and have real conversations regarding cost.

When it comes to the retail environment, the overarching theme is that consumers are always willing to pay for an experience. There is a feeling that the upscale and value for money experience will remain steadfast, whilst the demand for midscale experiences may fall away for restaurants, pubs and hotels in this space.

What has surprised you the most in 2022? The war in Ukraine is shocking to say the least. We have also been reminded time and time again of how fragile our supply chains are and global conflicts like this really bring that home, not to mention the Suez Canal blockage and HGV driver shortages throughout 2021. This year, we have also really felt the impact from Ukrainian and Russian exports. This has not just impacted grain exports, but fuel and fertiliser supplies too. As we approach the end of the year, many overworked people are tired and exhausted, and the stories of senior managers going on site and donning their chef whites to plug the people gap is getting more common.

Overall, during 2022 the resilience of the hospitality sector has been remarkable, and I have no doubt that it will persevere as we all continue into unchartered waters through 2023.

There are positives to come out of 2022 – but what lessons have been learned? The resilience shown by the hospitality sector through 2022 has demonstrated an incredible passion for survival from all involved. It is people and passion that make an industry strong, and there has been some great innovation and fantastic initiatives put in place throughout this year which have made a big difference. The one initiative that impresses me is Hospitality Rising - the recruitment campaign to get young talent into the hospitality sector. Launched at the start of Q4. It has attracted some of the big names in hospitality – none immune to the shortage of people – and has already led to 20,000 applications in the first month alone. This sense of community and pride to work for a sector that has traditionally been looked down upon, has really heartened and impressed me.

I’m in no doubt that we will continue to see great innovation in the sector as we head into 2023, with new initiatives that enable people to do with more with less and support the front of house and back of house experience, without replacing that all-important human touch, which is so vital for the sector.

Ultimately, the attitude has been to work with the cards we have been dealt. The voice of the hospitality sector has perhaps never been so strong and so loud, and it continues to cut through to the mainstream, with the great work that UK Hospitality does. I sincerely hope this momentum and sense of community continues.

Key trends and areas of focus for hospitality in 2023

  • People: this is an issue we have seen escalate throughout Brexit and the pandemic, but people must feel like part of the business they work with. The era of a large mobile workforce and consistently low wages is over. Staff turnover is also costly for companies. 2023 will need continued focus to ensure companies recruit and retain happy staff who in turn, provide a quality service to customers. If this is fundamentally right, it will help attract more people, improve customer experiences, and help to better control costs.
  • Technology: as companies continue to deal with workforce gaps, drive for greater sustainability and margin pressures, there will be an increased desire to really understand how tech can support the business. We’ll continue to see innovation and tech investment at the front of house, but this is where the human touch goes further. As such, we’re likely to see even more sophistication in back of house automation as companies seek to transform operational efficiencies and reduce costs – of which we will be leading the charge.
  • Cost control: as inflation places a downward pressure on growth and profitability, companies will want to up their game by focusing on cost control. There will likely be some innovations that come through from this, that will support in hedging supply contracts, reducing wastage and avoid sharp price increases that impact the bottom line.
  • Sustainability: this will come front and centre. With the pressures of this last year magnified, it feels like this has fallen by the wayside (see our last blog here). This will absolutely return to centre stage again next year.
  • Health: lastly, health and nutrition will become a big focus in 2023. We are already seeing trends such as reducing meat proteins, veganism and healthier gut promotion continuously moving into the mainstream. Recent legislation such as the calories on menus will likely be revisited, as we continue to develop our understanding of nutrition along with the marginal benefits this costly legislation has likely had on the nation’s health.

What’s in store for Zupa in 2023? It has been a transformative year for us as we’ve upgraded Caternet, making big steps forward around security, usability improvements, integrations, improving the flows, upgrading tech in line with our vision ‘to create sustainable hospitality businesses, where people spend less time doing mundane tasks and are freed up to do what they love’. We’ve also been working on some exciting plans to support future product vision, to ensure we continue to develop great products and provide a first-class service.

Our whole raison d’être is “to simplify hospitality business and enable people to thrive at work”. We view Zupa innately as a hospitality business - not just a technology provider, rather committed to the operational success of every single one of its customers.

Being a provider in the hospitality sector and facilitating businesses that thrive, it is important to be on the pulse of what is happening and ensure we take on the role of trusted advisor. This helps with challenging and educating our customers so that they can improve how they operate, whilst learning at the same time. Shared best practice is fundamental, and as we continue to build a community, we can connect businesses and improve that shared understanding to support in developing a more prosperous and competitive sector.

Hospitality businesses can be like swans. Graceful on the surface (front of house) but frantically peddling away beneath the surface (back of house). We are very focused on making the back of house exciting, automating all those tasks around stock and recipe management, whilst working with our partners in the wider ecosystem to offer a best-in-class solution for our customers. We will also continue our focus and commitment to sustainability, supporting our customers to make informed decisions around this such as reducing food waste and staying ahead of all new and upcoming legislation.

In summary, 2022 has been a strange and, in many ways, a tough year. It makes the next year harder to predict but I am clear it needs to pivot around people, customers and innovation. That applies to us as well as to our clients across the hospitality sector. At Zupa we are going to continue to build and connect our community, whilst continuing our research to challenge the sector and working closely with our clients and the wider market to find ways to improve and disrupt, as we all continue to navigate the year ahead.