By Melissa Toney is a solicitor and expert in regulatory and licensing at law firm, Shakespeare Martineau
2023 has begun in much the same way that the previous year ended for the hospitality industry, as shortages of staff, soaring energy costs, and low customer footfall continue. These troubles are exacerbated by an almost perfect storm of factors including the cost-of-living crisis, high inflation, and the after-effects of both Brexit and the Covid-19 pandemic.
As a result, many providers are thinking of ways to balance their books, with pub group Stonegate announcing that they are to sell 1,000 venues – a move that will provide little comfort to smaller businesses. Whilst support for the sector has been promised at various intervals by the Government, a plan has yet to appear, and the sector is currently facing another tough year that may well be too much for some.
The hospitality industry faces many challenges, but staff shortages are among the most pressing. The survey carried out by the industry association UKHospitality, suggested a current vacancy rate across the sector of 9%, implying a shortage of 188,000 workers. As the figures suggest, the sector needs to find a solution fast, especially as it looks to rebuild, and with governmental support appearing unlikely in the near future, what possible solutions are out there for businesses to take advantage of?
One solution enacted by some companies is to adapt their business operations around staff shortages instead of waiting to fill vacancies, for example, by pausing lunch services at some venues until staffing levels are higher. Other restaurants and pubs have cut back on the number of hours food is served or are running reduced menus due to the lack of available chefs. Some venues have introduced a four-day week for all full-time staff and reduced the number of days they are open. Additionally, owners and operators have stepped in to fill roles.
Some businesses are reaching out to large workplaces to run onsite cafés or provide their products in ones that are already in place. This diversification provides crucial additional streams of income, and business owners should consider exploring where they can diversify their offerings to better their financial position.
Despite business providers coming up with creative solutions and working collaboratively, it would still be beneficial for the Government to provide specific targeted support for the sector. For example, the Government could help the hospitality industry by reducing VAT and providing business relief. The decision to maintain the level of tax made very little difference to the hospitality sector, as any profits made are quickly swallowed up by the increase in the cost of living and the cost of doing business. Hospitality businesses face rising costs on all fronts, from energy to ingredients, but crucially labour costs, as they try to support staff to navigate the cost-of-living crisis.
Unless more help is available to support the hospitality sector, then it seems inevitable that many businesses within it will simply cease to exist. For many customers, eating out is a treat or experience and if a decision has to be made between paying a bill or having an evening out, it is obvious which choice will be made, especially as businesses turn to solutions such as raising menu prices to bridge the gaps in their profit and loss.
The key message for the hospitality sector is to look after its teams, as short-staffed teams may become affected by burnout. It is also beneficial to provide an array of training, apprenticeship, and development opportunities where possible to help staff to develop and grow, while opening up different avenues for new people to join.
Working in hospitality offers a viable, stable, and rewarding career path, and businesses should be looking to promote their roles with school leavers and graduates to find their workforce of the future. By sharing success stories, getting involved with developing the courses, and encouraging more people to know about what hospitality has to offer will be the best solution to support this vibrant industry, particularly while robust Government support is not in place.