How to improve cost control for your hospitality business in 2024

UK hospitality businesses have had it hard recently – first Brexit, then the pandemic and now a cost-of-living crisis. With little cash to spare, Brits are tightening their belts, and restaurant visits are getting the chop.

To uncover how these changes have impacted the industry, we pulled together a panel of experts from Tenzo, Tevalis and Apicbase. Each panelist shared valuable, first-hand advice on how restaurateurs can make sustainable changes to their business and enter the new year with better cost control.

The latest Xero Small Business Insights shows that 2023 sales only rose 2.2% in the year to the September quarter. This is much slower than the double-digit growth experienced at the start of the year. It also shows that wages in the hospitality industry are rising faster than the UK average, increasing up to 4.3% compared to a 3.5% overall wage increase. Despite hospitality offering better wages than ever before, it’s still struggling to find talent.

Getting your back of house in order

Another problem is the rising cost of food. According to Carl Jacobs, Apicbase CEO, restaurateurs are trying to maintain their margins by ensuring their food costs follow their sales projections. The challenge is to find the right margin. And if you have to raise prices, how do you do it without losing customers? 

Madeleine Pellico, from Tenzo, suggests raising the price of some menu items could solve this problem.

A Tenzo brewery client raised the price of its beers by 10-12%, but kept the price of food the same. Doing this improved its sales margins, without losing customers to competitors. That said, even though guests are still coming through the door, there’s not as many as before.

“One thing we are finding very interesting is how these cost changes are affecting not only sales, but the number of transactions. So we might see a growth in sales, but the number of transactions have actually levelled or are declining.” - Madeleine Pellico, CS Lead, Tenzo

So, instead of just looking at the revenue, restaurateurs should scrutinise how many returning customers they have and the number of transactions they get through now compared to before the increase in menu prices. 

Guests are coming, but where are the staff?

Although UK hospitality industry pay has improved, a lot of restaurateurs are still struggling to recruit talent, and with staff not showing up for a shift. Brett Smith, Planday’s VP of customer support (and a former hospitality manager) stresses how important it is to look after your team.

“Something that we can actually control and do as restaurateurs, is really focus on the employee experience. And you can use technology for that” - Brett Smith, Planday

Tech might feel like *another* outgoing, but the right investment can make a big difference for your employees. Offering them access to their schedules earlier and enabling them to request holiday or swap shifts on the go might seem small to you, but these touches can have a huge impact on your team’s lives. And caring for your employees’ wellbeing benefits your business. Happy employees stay with a business longer, serve guests with a smile and leave them wanting to come back. Younger employees also expect a certain level of digitalisation from employers, so to get them into the industry, employers need to stay ahead of the curve.

Kevin Dixon, the Director of Partnerships at Tevalis highlights the importance of understanding restaurant guests’ expectations. Because people have an almost limitless amount of restaurants to choose from. So delighting with an extraordinary dining experience and outstanding service becomes crucial for attracting guests.