The cost of living crisis is impacting almost all industries, and the hospitality industry is no exception. Soaring energy prices, the increased costs of supplies, rising wages, and reduced spending by the general public as hurtle towards a recession will see margins squeezed more than ever before. This comes on the back of economic recovery from the pandemic, with many in the hospitality industry still struggling to return to pre-Covid levels.

While one solution might be to increase prices in line with additional costs, this is a double-edged sword. The cost of living crisis, including soaring inflation, means the general public is curtailing its spending, with less disposable income for eating out. Businesses need to keep price increases to a bare minimum to entice customers through their doors. For many, it is a tough balancing act.

Such is the depth of the crisis that the industry faces, hospitality trade bodies have urged the UK government to act now to help the industry weather the storm, including bolstering consumer confidence and easing business costs.

However, there is little confidence in any meaningful action. According to the latest CGA and Fourth’s second-quarter Business Confidence Survey, only 23% of leaders are confident about the next year ahead. In comparison, last year’s survey showed confidence amongst leaders at 65%.

So, what does the cost of living crisis mean for the hospitality industry? Here I look at some of the key driving factors impacting the hospitality industry and how a robust PR strategy can help businesses weather the storm.

Energy prices at an all-time high

Gas and electricity costs are soaring in the UK and are now at an all-time high leaving many restaurants, bars, cafes, and caterers wondering if they will be able to keep the lights on. And energy increases will be compounded during the winter months, when bills typically soar due to increased usage and the price cap rises again. As a result, many businesses are responding by rising prices, reducing their gas and electricity usage where possible, and even cutting trading hours.

Staff shortages leading to higher wages

Staff shortages further compound the issue, exacerbated by Brexit and the pandemic. Many in the hospitality industry have struggled to return staffing levels to pre-Covid days, causing ongoing disruption and growing pressure on existing hospitality staff. Some in the hospitality industry are increasing wages to entice new staff members, further increasing the cost of running their business.

Increased supplier costs

Rising energy, fuel costs, and staff wages naturally have a knock-on effect, increasing the cost of supplies, including food and drink. This is further compounded by disruption to supply chains, all of which impact hospitality operators’ profit margins. According to reports, costs are up on average around 10%, with the biggest increases seen in dairy, grains, meat, and fish.

Reduced customer spending and footfall

Soaring inflation, tax increases, and higher energy prices mean that the general public has less disposable income. According to the latest reports, average pay has fallen by three percent, the biggest drop since records began in 2001. This means that many hospitality businesses will see the average customer spend drop, coupled with lower footfall. Indeed, according to a recent YouGov poll, more than a third of people have reduced their spending on eating out or enjoying takeaways.

How can hospitality PR help?

A quality PR service offers a high return on investment and increased profile when you need it most, helping foodservice brands to win new business just when it is truly needed. Our B2B campaigns are customised to meet individual business needs and planned to perfection to deliver meaningful results.

Want to learn how a bespoke marketing and PR campaign can help bolster your business? Connect with me on LinkedIn and learn more about the tailored support Proactive Solutions offers to the hospitality industry.