Hospitality’s Productivity Rising, But More Support Needed

DiningOnly a quarter of leaders think hospitality is more productive than other industries, the new Future Shock report from CGA and UKHospitality shows

Hospitality is more productive than widely thought, the latest Future Shock report from CGA and UKHospitality reveals—but business leaders see plenty of room for improvement.

The fifth edition of the twice-yearly report highlights data showing that hospitality’s revenues have risen faster than employment levels in recent years—a reliable indicator of increasing productivity. Gross Value Added per hour worked has recorded a compound annual growth rate of nearly 3% since 2009—nearly 50% faster than the UK economy as a whole, and better than major sectors including business services, agriculture and energy.

But an exclusive survey of business leaders by CGA reveals significant scope for improvement in productivity levels. Only a quarter (28%) of leaders believe hospitality performs better on productivity than other UK industries, with the remainder thinking it performs worse (44%) or the same (28%).

Leaders contributing to the survey called for the government to do more to improve hospitality’s output. Productivity in the sector has been hit in recent years by pressures including increases to the National Minimum and Living Wages, rising rents and inflation in food prices, and it contributes around £39bn a year in direct tax receipts. One business leader told the survey: “A reduction in taxation would help productivity dramatically.”

The Future Shock report sets out ideas to improve productivity, including smarter procurement, better menu engineering, reducing utility costs and cutting levels of food and drink waste. Much of the improvement can be made with the help of technology—which more than nine in 10 business leaders think is either fundamental (54%) or important (38%) in improving employee productivity.

As well as research from CGA and views from UKHospitality, Future Shock features insights from partners Heineken, Bidfood, NFS Technology Group, Alpha Rewards and Tahola on improving productivity through technology use, waste reduction and staff engagement.

Karl Chessell, Business Unit Director, Retail and Food at CGA, says: “Considering all of its cost and administrative burdens, hospitality is an impressively productive industry—but our survey of leaders shows that there is room to improve. This is a dynamic and creative sector, and it will be fascinating to see how technology and innovation can improve productivity levels in the years ahead.”

Hospitality has sometimes been perceived as less efficient than other industries, but this report makes clear that we are collectively much more productive than we might think—and getting better all the time. The sector is also productive in ways that no metric can demonstrate, with a valuable social currency that makes a positive difference to people’s lives every day,” Chessell continued.