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Will hospitality get the support it needs this winter?

  • Asset Type: Blog Post
  • Author: Ollie Brand | CEO
  • Publication Date: 18 Sep 2022

Has there ever been a more challenging time for the hospitality industry? With many thousands of pubs and restaurants currently facing closure, urgent government support is needed to rescue businesses from soaring energy bills and continued price hikes. To make matters worse, many hundreds of thousands of hospitality jobs are also at risk. Of those companies owning almost half of the UK’s 47,000 pubs, for instance, many have said their tenants have already given notice because they will not be able to absorb the sky-high energy costs, which are set to rise more than fivefold in some cases, in the coming months.

The outlook seems bleak for many and the new Prime Minister’s commitment to support businesses is eagerly awaiting action as Liz Truss finalises plans for a £40 billion support package to lower energy bills. However, help may not be as immediate as everyone would like as Truss considers whether to place a cap on firms’ energy costs, similar to a proposal that would protect UK households, or to implement a unit price reduction that all energy providers would have to offer to businesses.

Whatever the outcome, one thing is for sure, the hospitality industry needs significant financial support to ensure its survival this winter. From freezing energy prices to lowering VAT and business rates, the pressure for greater support is on; this is a sector that cannot afford to sit back and wait as costs continue to spiral. Bloomberg has even reported that the unit energy price could be further reduced for sectors that are particularly vulnerable, including hospitality firms. Yet, the freezing of costs and interim financial support will only help the industry in the short term.

In the face of more challenges ahead, businesses also need to be planning beyond the short to medium term. And, if it is to rebuild confidence and resilience, the whole industry will need to receive the right long-term support in order to move forward and deliver growth with a positive vision for the future.

Hospitality operators are facing annual bill rises of at least 300%, coupled with inflation being at double digits for this first time since 1982, according to the latest report from the Consumer Price Index (CPI). Now, more than ever, hospitality must also consider investing more seriously in technology to help manage operational costs, regain control of spend, eliminate overspend and to rebuild a more robust supply chain for the future.

In a recent independent study of UK catering firms, commissioned by Zupa, the top concerns identified by chefs and managers were rising costs, poor kitchen management, lack of staff, and food shortages. Technology, like Zupa’s Caternet platform, can act as the lever to alleviating all of these issues from reducing admin to free up staff time so that they have time for creativity, to supporting hospitality businesses with price hikes, negotiating on supplier costs and making sure firms obtain the best live prices on goods, not to mention building stronger supply chain networks. Despite this, many businesses are still failing to make the connection between using outdated, manual processes as opposed to more efficient tech, and the key operational concerns raised by their staff.

Right now, the hospitality sector is calling for clarity over energy costs as we head towards an Emergency Budget likely to be held later this week. Although this is essential to businesses in the industry in terms of managing short term cash flow, the sector needs to put a much bigger plan in place for the longer term if it is to survive and grow. Technology has the ability to transform operational performance and profitability for the sector, for the better. It’s time to embrace every bit of support available in the quest to reduce costs and rebuild a more resilient hospitality sector for the future.

Hear more about our latest industry research

Join our webinar on 4th October, where Zupa CEO Ollie Brand and commercial director Neil Shayle will be sharing findings from our latest industry study, as well as discussing what contract catering businesses need to do to survive and thrive in today's economic climate. Attendance is FREE - simply click here to register your place. All registrants will also receive a copy of the full report.