On-trade

Operating costs now over half of turnover in UK

Operating costs for UK hospitality providers have increased to challenging levels, reaching 55.2% of turnover before rent – the highest since 2007 - according to UKHospitality and specialist business property adviser Christie & Co.

 

The report shows that, as is the case here, the hospitality sector in the UK has faced relentless economic and operational challenges forcing operators to adapt and look to alternative revenue streams to drive business.

The report shows that, as is the case here, the hospitality sector in the UK has faced relentless economic and operational challenges forcing operators to adapt and look to alternative revenue streams to drive business.

 

This has been driven by the soaring utility, premise and operational costs facing operators in the industry as they attempt to rebuild following the pandemic there.

The 13th edition of the UKHospitality Christie & Co Benchmarking Report – published recently reveals the results of a survey of operators covering over 5,000 hospitality businesses and – for the first time – includes a separate hotels segment.

The report shows that, as is the case here, the hospitality sector in the UK has faced relentless economic and operational challenges forcing operators to adapt and look to alternative revenue streams to drive business.

The survey period covered the six months to December 2021 which is representative of a turbulent time for the sector and half the usual period for analysis.

As a result, the responses this year reflect the continuing evolution of both the UK consumer and investor landscapes, states the report.

Whilst the report notes a contraction in like-for-like sales of 2.3% in comparison to the second half of 2019 across the entire survey, certain segments of the market saw topline growth, with accommodation-led businesses leading the way at 9.8% like-for-like growth in revenue as these businesses took advantage of the staycation boom.

“Despite the significant challenges that lie ahead in 2022, new opportunities and ways of operating have emerged over the last few years and with consumer demand returning there’s still reason to remain cautiously optimistic,” comments Stephen Owens, Managing Director – Pubs & Restaurants at Christie & Co, “With full year trading returning for next year’s survey, we look forward to updating the sector with an increasingly accurate benchmark against which operators can compare performance.”

Kate Nicholls, Chief Executive of UKHospitality, points out, “This year’s survey highlights the extreme pressure that hospitality operators are labouring under, with costs soaring to a new record high.

“We have been working with Government to make clear the harm this is causing to our ambitions for growth, investing in high streets and creating skilled roles. It’s imperative that Government takes action to help us tackle the inflationary headwinds we face, unlock growth by removing regulatory barriers and creating a tax and investment framework for the future.”

 

Sign up for Drinks Industry Ireland

Get a free weekly update on Drinks Industry trade news, direct to your inbox. Sign up now, it's Free