By Dan Hawkie, Managing Director at Feed it Back (https://feeditback.com/), the customer experience dashboard for hospitality operators.
The record-breaking heatwave last month highlighted just how disruptive extreme weather can be for hospitality. Up and down the country, venues without adequate cooling facilities were forced to shut in fear of staff and customers being put at risk.
The closures came at what should have been peak season for operators. This, at a time where the industry is already battling sky rocketing costs and wider economic challenges, was just the latest blow for many venues who rely on the busy trade during the summer months.
While the closures were arguably only over two days, it follows the ongoing rail strikes which caused many venues to close or reduce their opening hours, as well as the wider financial challenges facing the hospitality sector.
Inflation rose to a 40-year high last month to 9.4%, impacting the overall cost of goods for hospitality venues. The skills shortage continues to burden the industry too, with recent Office for National Statistics figures showing there were 83% more vacancies in the sector between March and May compared to the same period in 2019. To add to this, we also know that consumer spending is expected to decrease. In our more recent Feed it Back Pulse survey, which questioned 58,060 consumers, we found that a third (36%) of customers expect to spend less eating and drinking out over the next three months, as a result of rising costs.
We saw the impact of these economic challenges just this week when McDonald’s announced it was increasing the price of its cheeseburger for the first time in 14 years due to rising costs. If operators the scale of McDonald’s are having to raise their prices, even with their buying power, it will be almost impossible for smaller venues to avoid price hikes, potentially losing customers as a result.
It’s clear that our entire industry needs further support from government to avoid any more closures. In fact, a recent study from the British Institute of Innkeeping found that the economic and staff pressures have made 15% of UK’s independent pubs no longer viable – a statistic that is, unfortunately, likely to represent the majority of the hospitality sector.
To make sure our venues survive this current wave of economic challenges, we need policy support from the government. There is no denying how critical the furlough scheme was during the pandemic – it saved thousands of businesses and supported the livelihoods of many. But without further support now, such as a reduction in VAT for businesses in the sector, we risk that funding used for furlough going to waste.
A reduction in VAT would provide our hospitality venues with the breathing room to withstand any increases in supplier costs and boost the cashflow of operators to ensure they have the capital to overcome any further financial shocks – and the timing of this could not be more pertinent.
The reason this is so important, is our hospitality sector delivers so much more for our communities than just economic benefit. Our hotels, restaurants, bars and pubs are often the pillars of our villages, towns and cities. They’re a central location for friends, family and workplaces to meet, and without them, investment needed from government to improve community spaces will no doubt cost more than the VAT reduction we are asking for.
As a customer experience platform, we see day-in-day-out just how valuable operators are to communities. We’re witness to the positive feedback, the heartfelt stories and the special moments that happen during customer visits to hospitality venues.
We are now at a critical time, with the Tory leadership contest underway, where the next Prime Minister can rightly give the hospitality sector the financial backing it needs and make sure our venues remain the focal point of our communities.
Last week’s heatwave was a reminder of just how susceptible the hospitality industry is to external factors beyond its control. We need to make sure we’re supporting the industry in every way we can to build up its reserves following a pandemic, to make sure it can withstand any future setbacks.