How is the cost of living crisis affecting hospitality businesses in the UK?
The cost of living crisis has been hitting everyone hard. We investigate how it’s been impacting the hospitality sector in particular.
For more than a year, the UK has been burdened by a generational cost of living crisis, driven largely by post-pandemic inflation. Just about every sector of the economy has been affected, but certain industries, like hospitality, have felt the pain more keenly.
The cost-of-living crisis in the UK
After months of double-digit inflation, things in the UK are starting to finally ease, with the housing-adjusted Consumer Prices Index (CPIH) coming down to 6.4% in July. Obviously, in a historical context, this remains a very high figure; but it’s movement in the right direction from the perspective of most consumers.
For those at the very bottom of the socioeconomic ladder, things are extremely tight. A report by Crisis in March 2022 showed that “families on the breadline are facing an average £372 deficit between their Local Housing Allowance and the cost of the cheapest rents in their local areas.”
How is the current cost of living crisis affecting UK businesses?
For UK business, the pressure is coming from several different directions. The rising cost of oil has driven up both fuel and energy costs. This applies to remote workforces, which must pay to heat many different premises, and centralised ones, which must pay to commute.
The flow of cash has also become a pressing concern. Clients whose finances are squeezed might be more likely to delay payments, or to avoid making them altogether. This is a problem made worse if the business in question doesn’t have a generous reserve of cash to begin with.
How is the current cost of living crisis affecting the wedding industry?
A wedding has long been considered a one-off, ultra-lavish spending spree. But for many couples, this assumption is in need of revision. In a survey of 2,000 UK adults conducted in March 2023 by diamond ring specialists, F.Hinds, 94% of respondents reported that they would be looking to cut back on expenses.
Around 45% claimed that they would be cutting the guestlist for financial reasons, while a third would consider alternative venues. Flowers came just behind on 32%. Interestingly, two of the most significant areas of spending – the dress and the rings – were among the least popular things to cut, with just 18% and 14% of couples naming them, respectively.
The F Hinds survey reported that around a fifth of couples would consider cutting back on guest’s meals, which points to a broader malaise across the hospitality industry.
How is the current cost of living crisis affecting food and drink businesses?
Like all businesses, food and drink is facing mounting pressure from wages, transport and heating. But the cost of food has risen far more sharply than many other items, with some items, like sugar, becoming enormously expensive in a very short timeframe.
It’s fair to say that the catering and hospitality business has had a tough time over the last year. Despite falling inflation, it’s fair to predict that more challenges lie ahead, thanks to changing technologies and consumer habits.