The Bank of England revealed that inflation rose to 2.3% in October 2024, intensifying concerns for the UK’s hospitality industry as cost pressures continue to build. The latest CGA RSM Hospitality Business Tracker shows that sales across restaurants, pubs, and bar groups remained flat in October, reflecting the growing strain on the sector.
Kate Nicholls, Chief Executive of UKHospitality, warned about the significant challenges ahead in light of the new inflation figures, “This higher-than-expected level of inflation is an ominous warning of what could come in April, when businesses across the country will be hit by significant cost increases. Hospitality is braced for its own £3.4 billion cost increase, and that will impact jobs and push up prices, which we know will be a struggle for customers.
“The reality is that businesses are unable to absorb any more cost, having taken on so much over the past four years, and it is consumers and team members that will feel the effects.
“If the Government wants to keep a lid on inflation, protect jobs and help businesses, it must urgently rethink its changes to employer NICs. I am calling for them to protect businesses and staff by introducing either a new employer NICs band for lower earners or implement an exemption for lower band taxpayers working fewer than 20 hours per week.”
The news comes as the CGA RSM Hospitality Business Tracker shows that Britain’s top managed hospitality groups achieved just 0.6% year-on-year sales growth in October—the fourth consecutive month of below-inflation growth. The results mark the weakest performance since April and reflect fragile consumer confidence amidst rising costs and poor weather.
Halloween celebrations provided some relief, contributing to stronger sales in early November, but concerns remain high for the critical Christmas trading period. Total sales growth, which includes newly opened venues, stood at 2.4%, while like-for-like sales in managed pubs rose 1.5%. Restaurants saw a slight dip of 0.1%, and bar sales dropped 4.2% compared to October 2023. In contrast, on-the-go food and drink businesses outperformed, with 4.3% growth, as consumers appeared to opt for cheaper alternatives.
Karl Chessell, Director – Hospitality Operators and Food, EMEA at CGA by NIQ, said, “It’s clearly been a tough autumn for many restaurants, pubs and bars, and real-terms growth remains elusive. Conditions haven’t been helped by the Budget, which is imposing significant new costs on businesses via National Insurance contributions while giving consumers little encouragement on spending.
“It is going to be a make-or-break Christmas for some operators, and while underlying demand for hospitality remains good, trading conditions are likely to remain very difficult well into 2025.”
Saxon Moseley, Head of Leisure and Hospitality at RSM UK, added, “October’s disappointing results show the industry essentially stalled last month, with poor weather and concerns about potential tax rises in the Autumn Budget putting consumers off from venturing out.
“In hindsight, many of those fears were misplaced, as the Budget did not directly increase taxes on consumers. However, the proposed fiscal changes are expected to have a severe impact on the hospitality industry, with increases in National Minimum Wage, employers’ NIC and business rates all set to reduce margins and push some businesses into the red.
“Looking ahead, operators will have little choice but to raise prices, although without a significant boost in consumer confidence, there is little guarantee this will translate into positive like-for-like sales.”
