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Hospitality wage inflation bubble ‘bursts’, more than 600 new food businesses, the end of tipping?

By The Morning Advertiser

- Last updated on GMT

People moves: the latest news on people moves, jobs and training from across the pub sector
People moves: the latest news on people moves, jobs and training from across the pub sector

Related tags Jobs Salary Pubco + head office Sacha Lord Fourth

The latest update on people moves, jobs and training from across the pub sector includes news on hospitality wage inflation and attempts to safeguard workers against a downturn in tipping.

Pandemic ‘emphatically bursts’ hospitality sector wage inflation bubble

New data from hospitality and leisure software provider Fourth, has revealed that the average hourly wage for hospitality workers over the age of 23 was £8.98 during March 2021 – just 7p higher than the new National Living Wage (NLW) threshold introduced on 1 April. 

The research, compiled from a cross section of companies across the restaurant and bar sectors, uncovered a sizeable slowdown in the acceleration of the cost of labour, which only increased by 12p from March 2020 (£8.86) to March 2021 (£8.98). 

The figure, a direct result of the pandemic, is significantly lower than the traditional rate of wage inflation, which, for the top age bracket, has tracked significantly ahead of NLW increases for the past two years – 39p higher in 2019 and up 51p in 2018. 

The news comes after the Government reworked the NLW structure by reducing the threshold for the highest paid bracket from 25 to 23.

“The industry has experienced an unprecedented period of labour inflation in the years building up to the pandemic, driven by the fight to attract and retain the best talent,” Fourth’s director of analytics EMEA, Max Tucker, explained.  

“This bubble has been emphatically burst by the pandemic, but with the legislative increases to the National Living Wage coming into force, and the staggered reopening of sites on the horizon, the indications are this is about to change." 

Square Root hires new commercial director after £570k equity raise

East London-based Square Root has added Nick McKay to its senior team as the soft drinks brand’s new commercial director. 

Prior to joining the drinks maker, McKay occupied a number of different commercial and sales based roles at companies including Coca Cola, L’Oreal, Zeo and Monster Energy. 

He joins Square Root shortly after the brand completed a £570k crowdfunding campaign. He will provide strategic support to co-founders Ed Taylor and Robyn Simms and offer guidance to Square Root’s sales team.

“I am really pleased to be joining Square Root at this exciting time,” McKay said of his new role. “With a hugely successful crowdfunding campaign behind us and the economy poised to return to work, this is a crucial period to consolidate on Square Root’s strong market position and secure future success. 

“I look forward to supporting Ed and Robyn, and helping the business to grow, scale and reach more new consumers.”

Square Root cofounder Robyn Simms added: “After closing off our crowdfunding campaign at the end of last month, we’ve stepped up our sales and marketing efforts, and are thrilled to be welcoming Nick to our team.  

“With over ten years’ experience, he brings a huge wealth of valuable industry knowledge and a real passion for challenger brands to the table.” 

Square Root

80% of hospitality workers could see decline in tips

Greater Manchester’s night-time economy adviser, Sacha Lord, has called for the introduction of a hospitality industry-wide fair tipping policy in a move backed by worker’s union, Unite, and Greater Manchester’s Mayor, Andy Burnham. 

Lord warns that a forecasted decline in gratuities post-Covid will have “massive financial consequences” for the sector's staff, most of whom are already on the minimum or living wage. 

According to non-profit organisation One Fair Wage, 83% of hospitality workers in the US had experienced a decline in tips after reopening while 67% said tips have decreased as a result of having to enforce Covid-safety rules.

Lord fears that such trends could make their way across the Atlantic as Britain prepares to reopen its pubs and bars.

"Not only has Covid all but killed off cash, but the social distancing measures in place means less interaction between waiting staff and customers,” Lord said. “It's likely we'll see a serious decline if not the end of tipping because of this.

"Bar and restaurant staff typically earn minimum or less than living wage and rely on tips to top up their salaries. Tips can mean the difference between walking home after work and getting an Uber, so there's a clear safety aspect for operators to acknowledge if we do see a decline."

Lord has received the backing of Greater Manchester Mayor Andy Burnham, who has called for a new employment standard – including tipping – for the hospitality sector and night-time economy in his 2021 Manifesto announced today. 


More than 600 food businesses created by Brits on furlough 

Some 634 new food businesses were created by Britons on furlough since the onset of the Covid-19 pandemic, while the number of registrations by those made redundant increased by a third (33%) from last year to create 1,450 new food firms. 

Fourteen percent of new food collection and delivery registrations – around 1,270 enterprises – were the result of a need for an extra source of income, according to research published in the Boom or Bust: Beginning a business in a pandemic​ report published by The Accountancy Partnership. 

“Starting a business is notoriously difficult, even in normal times, so it was somewhat unexpected to see new businesses in their hundreds of thousands being set up last year,” Lee Murphy, managing director of The Accountancy Partnership, said. 

“Our research shows that many lockdown entrepreneurs saw creating their own takeaway food businesses as their only option after being made redundant or facing other financial troubles, but the statistic of those fulfilling longer-term dreams of owning a business is hugely encouraging.

“It means that even businesses launched out of necessity have people behind them with a genuine desire to be business owners. This enthusiasm will help fledgling businesses thrive despite the adverse circumstances of their inceptions.”

Stella Tips to distribute £500,000 among hospitality staff  

Part of the Budweiser Brewing Group UK&I portfolio, Stella Artois has welcomed the return of outdoor trading and pubs, bars and restaurants on 12 April by pledging to add £1 to staff’s tips for every pint of Stella Artois sold in participating on-trade outlets.  

Stella Tips will raise half a million pounds worth of tips which will go to pub and bar staff, who’ll expect to receive an average tip of £42 each.

“Britain’s pubs are the cornerstones of our communities, and it’s the people behind the bar who bring this community together with a welcoming smile and pint in hand,” Ali Humphrey, European marketing director of Stella Artois, said.

“The last 12 months have been particularly hard on this workforce, with one important issue being the lack of their usual customer tips. 

“We want to put tipping back on the agenda, so we’re proud to be working with our largest beer brand, Stella Artois, to launch Stella Tips as our way of showing gratitude to those behind the bar.  

“When the pubs reopen we’ll be raising a Stella, and a tip, to those who make the return of the hospitality industry possible.”

Discussing the scheme, Heath Ball, owner of North London’s award-winning Red Lion & Sun, added: “The last year has been an incredibly difficult one for everyone working in the industry, and one many weren’t sure they’d make it through. 

“The sector wants and needs a strong recovery, so it’s fantastic to see the effort and support offered through this Stella Artois campaign. 

“Tips are a hugely important part of the job and something my team have had to go without for most of the Covid-19 duration. They’re extremely pleased to see the Stella Tips campaign putting emphasis on staff tips and handing over such a generous amount.”


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