Time and again over the past two years, different challenges have put the UK hospitality industry through the ringer. Countless articles have been published about the damaging impact of the pandemic and various national lockdowns on restaurants, cafes and bars, where in the first 12 months of Covid-19 alone we saw almost 10,000 businesses close their doors for good.
Difficulties persisted for hospitality entrepreneurs, as other factors besides Coronavirus caused numerous supply chain issues and staff shortages. These meant that even after lockdown and social distancing measures were eased and eventually rescinded altogether, running a successful hospitality business was still a difficult task.
Measures were taken to protect the sector throughout the pandemic on a Governmental and social level – while communities banded together to support local eateries, the Government supplied furlough payments to support the workers of shuttered businesses. In an effort to encourage greater leisure spending, the Government launched the Eat Out to Help Out scheme and pledged to decrease VAT tax to 12.5%, enabling hospitality owners to offer enticing prices and increase their profits where possible.
Silence in the Spring Statement
Now, in the face of a massive cost-of-living crisis that is likely to tighten purse strings around the globe, hospitality faces another challenge to overcome. Before the Government’s Spring Statement, which arrived exactly two years after the UK’s first lockdown, fingers were crossed throughout the hospitality sector that more support would come. In particular, businesses wanted to see the VAT reduction extended to support struggling businesses that are still trying to return to their pre-pandemic levels.
Unfortunately, there was no mention of hospitality recovery or an extension to this tax reprieve in the Chancellor’s speech.
But just as the resilience and creativity of hospitality decision-makers saw them through the hardships and knocks of the past 24 months, this latest setback is unlikely to discourage them too much. We have seen how restaurants, takeaways, cafés and bars of all shapes and sizes have pivoted and adapted to the challenges of the pandemic, finding novel and innovative solutions to restrictions and lost revenues. Now, once again, open-mindedness is the key to hospitality’s success, and while the VAT break is over, there are certainly options to pursue.
Thinking outside the box
Our recent research painted an impressive picture of the lengths to which hospitality owners were willing to go to safeguard their businesses from hard times. We quizzed 250 senior decision-makers with UK bars, restaurants and takeaways. We found that 75% had turned their focus to takeaway services to survive, while 69% trimmed down their overheads by sourcing new suppliers at more favourable rates. When up against it, these businesses adapted to keep the lights on, but to overcome this latest challenge, some will need to go further.
The best opportunity for businesses looking to boost their revenues back up towards their pre-pandemic levels is delivery franchising. Heightened VAT might make it difficult to offer lower prices or notable discounts, but by incorporating a secondary, virtual brand into their kitchen operations, they can increase their order volumes significantly. Peckwater Brands’ partner businesses that have taken on a virtual brand report an average increase in delivery orders of 823% – something that business owners cannot afford to ignore.
The road to recovery
With Peckwater’s help, any hospitality business with the operational capacity to increase their output can do so easily, and by selecting the perfect brand for their business that is aligned in terms of suppliers and ingredients, they can shrink their overheads by reducing wastage and ingredients cost by an average of 4% and 11% respectively.
Once again, embracing new ideas and solutions is hospitality’s best chance at returning to their pre-pandemic best, and we at Peckwater Brands will do everything we can to assist business owners on their road to recovery.
Schedule a call with us today and find out what the right brand for your business could be.
Topics from this blog: Hospitality
