The challenges faced by the hospitality sector have been well documented throughout the past two and a half years.
It has been impossible to ignore the upheaval caused by multiple lockdowns and social distancing rules being imposed throughout the Covid-19 pandemic. And just as recovery seemed on the horizon in January 2022, the cost-of-living crisis hit; Spring saw the energy price cap increase by a whopping 54%, whilst inflation soared to a 40-year high of 9.4%.
In fact, our recent survey amongst 201 decision-makers within the UK hospitality sector found that over three-quarters (76%) of respondents claim that inflation is the single greatest threat to the future of their business.
Inflation alone should be more than enough for businesses to have to deal with; however, it seems that the reversal of certain Covid-induced financial support packages earlier this year has mounted further pressure on cafes, bars and restaurants.
As such, an overwhelming majority (79%) of hospitality business leaders believe that the government should have delayed the increase of VAT to post-pandemic levels for hospitality businesses by at least one year. Elsewhere, 69% feel that the increase in National Insurance (NI) contributions (which came into effect in April 2022) was a mistake.
Clearly, hospitality businesses are facing momentous challenges as they attempt to remain afloat. The question is, is there anything that can be done to support them?
A cry for help
Peckwater Brand’s survey also highlighted the actions hospitality businesses would like to see the government take – and unsurprisingly, many suggestions centre around financial support.
Firstly, almost two-fifths (39%) believe that the government should provide more financial support packages to hospitality businesses; likely mirroring those introduced throughout the pandemic, such as VAT cuts or emergency loans.
Others demanded support action in form of cutting businesses’ unavoidable expenses. For example, over a third (36%) would like business rate holidays to be offered to struggling restaurants, bars, cafes, and pubs. A similar number (35%) would like their energy bills to be subsidised.
Unfortunately, such support is unlikely to emerge in the immediate future. After all, with the Conservative Party leadership battle currently underway, any major policy decision is unlikely to be announced until September 2022 at the very earliest.
Many cafes, restaurants bars and pubs cannot afford to ‘wait and see’ when it comes to such support – they must, then, take matters into their own hands and think creatively about their recovery strategy.
And, perhaps, virtual brands could provide a solution.
A virtual recovery
Virtual brands – brands which exist solely on third party delivery apps like Just Eat, Uber Eats or Deliveroo – have the potential to transform the performance of a hospitality business, which are currently operating below capacity.
They can fit seamlessly into existing operations, as. they make use of resources such as staff, ingredients and equipment, which would have otherwise been left unused. Consequently, kitchens are able to bolster their output, explore new menus and widen their pool of potential customers.
So, for example, a Mexican takeaway may only be using 60% of its kitchen capacity. As such, it would be feasible to incorporate a new Chinese or Korean brand into existing operations, without upending the functionality of the business. The takeaway already purchases a key core protein for dishes so, aside from a few additional side ingredients or spices, it is unlikely to see a major increase in supply costs as a result.
For some hospitality businesses, however, the thought of managing a brand (independent from their own) and learning a new menu can be intimidating. Luckily, Peckwater Brands can provide support.
Peckwater Brands helps its partners every step of the way, from finding a suitable virtual brand, to providing ongoing support and advice to help businesses effectively operate and grow the brand. The results speak for themselves, with our partners earning an additional £12,103 – £57,687 a month having taken on at least one virtual brand.
Challenges still lie ahead for hospitality sector businesses, and it will likely take some time before the government gathers itself to announce any support packages. Accordingly, it is important that hospitality businesses think outside the box, and consider innovative survival strategies, such as the implementation of virtual brands. And Peckwater Brands is on hand to help organisations effectively onboard a virtual brand (or brands) and consequently, strengthen their financial position in the months and years to come.
Topics from this blog: Hospitality Virtual Brands
