Hospitality industry revenue falls by 2.3%

UK Hospitality has released the Benchmarking Report, revealing the “extreme pressure” facing on-trade businesses.

Teaming up with real estate agency Christie & Co, UK Hospitality produced the Benchmarking Report with growth data of sectors within the on-trade for the six months to December 2021.

The trade body revealed the ‘significant impact’ the pandemic has placed on UK-based hospitality operators during one of ‘the most challenging periods in its history’.

The report surveyed 54 companies – which included 4,791 licensed outlets – and found operating costs have increased to 55.2% of turnover before rent – the highest since 2007. According to UK Hospitality, this is due to soaring utility, premise and operational costs facing operators in the industry, as operators attempt to rebuild following the pandemic.

The overall survey saw a contraction in revenue of 2.3% across all hospitality sectors, in comparison to the six months to December 2019.

Kate Nicholls, chief executive of UK Hospitality, said: “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 the 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.”

The nightclub, accommodation-led and casual dining segments saw growth, while community local, high street, food-led, and wine bar segments saw decline.

The high street segment suffered the most, witnessing a 15% drop in revenue.

The accommodation-led and nightclub categories outpaced inflation for the period, with the former noted to have benefitted from the staycation boom during the pandemic.

UK Hospitality approved scrapping all remaining Covid-19 restrictions in February, when the sector lost £114.8 billion (US$156.3bn) in sales over two years due to the pandemic.

Stephen Owens, managing director for pubs and restaurants at Christie & Co, commented: “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 is still reason to remain cautiously optimistic.

“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.”

A survey conducted by UK Hospitality, the British Beer and Pub Association and the British Institute of Innkeeping found that 45% of businesses have been forced to reduce opening hours in order to cut costs.