Rising cost pressures are anticipated to effect a large proportion of the hospitality industry, with many operators fearing closure.
Operators listed technology, sustainability and alternative revenue streams as methods they plan to prepare for upcoming cost rises.
1. Technology
Owner of the Pig’s Head in Clapham, south-west London Maria Hunter explained she feels it is becoming increasingly difficult to balance rising costs while keeping prices fair for customers.
She added: “Without meaningful support, we risk losing the independent businesses that make hospitality so vibrant.”
One of the main ways in which she is aiming to reduce labour costs, is by maximising AI usage so costs are kept down on site and staff are not on shifts as much.
She continued: “ To mitigate this, we’re looking at ways to reduce labour costs, including implementing AI for certain tasks and simply having fewer staff on shift.”
2. Sustainability and diversifying offerings
Co-owner of the Black Bull in Sedbergh, Cumbria, James Ratcliffe shared he felt making the most of produce and diversifying menu options was a key method to implement when tackling rising costs.
He said: “We now buy whole cows and we buy directly from farmers. However we have seen almost 20% increases in cattle prices recently. We are having to look for alternative menu options.”
Ratcliffe explained he may consider swapping out beef for venison, as an example of diversifying their menu and keeping consumer interest high.
He added the Black Bull had introduced a tasting menu over the past 12 months, which had not only proven to be popular but also reduced waste and helps with profit margins. He also explained this has ultimately been more ethical overall.
3. Alternative revenue streams
Owner of the Greyhound Inn in Warslow, Derbyshire Lee-Wilson Hart touched on how he is dealing with the pressures of cost rises.
He said: “One of the main ways we are looking at mitigate cost rises really is having our brewery on the side.” He explained that as a family-run business, he had to consider alternative revenue streams in order to keep the Greyhound up and running.
Lee-Wilson Hart explained that thinking outside the box and securing income from a different business, has really helped the Greyhound.
4. Staff training
Lee Wilson-Hart also explained that he felt training internal staff was key to ensuring business success. He outlined that at the Greyhound, they try and avoid the process of hiring externally.
He explained from a cost perspective, he cannot consider hiring outside of the team.
Touching on the financial hardships operators are dealing with in the current climate, Wilson-Hart said: “…Operators and landlords aren’t walking around with wads of cash in their pockets anymore…these are different times.”
Similarly, Ratcliffe also shared his thoughts on training internal staff. He explained that he felt it a better method to keep and maintain a smaller well paid team in order to run efficiently and at lower costs.
Sharing that he thought hiring externally may cost more and be less effective if using recruitment companies.
5. Reflecting on positives
Owner of Cheshire Cats Pubs & Inns, Tim Bird explained he felt focusing on positive aspects amid the current climate is something we all should aim to adopt.
Touching on the positive effect of lower business rates, he said: “We must look at the positives… Business rates are still 40% less than what they were pre-Covid” This is, he said still “hugely helpful”
6. Raising revenue
Ratcliffe touched on raising revenue to adapt to rising costs. He said: “We’ve ultimately spent the past 12 months cutting costs and trying to help that way but there gets to a point where we can’t do it anymore and there’s nothing left to cut.”
He explained that he felt raising revenue was a vital way to tackle rising costs and that sometimes, it is one of the most necessary options. He added: “You’ve got to concentrate on revenue, that is the key now.”
7. Educating customers
Lee-Wilson Hart stressed that he believed that appropriate customer education is a vital way in which the stress of tackling cost prices can be reduced.
He said: “Honesty and transparency with customers and education around the fact that If household energy bills increase, it will affect business operating costs as a knock on effect.”
Lee-Wilson Hart explained that he felt the more education consumers have and the more real life insight into what operators are going through the better.
He added: “The main thing as a business is if you can educate customers and be open and honest about it, the fact that it has gone up.”
8. Upselling opportunities
The Black Bull’s, James Ratcliffe explained he recently introduced an upsell course on his menu, one in which 50 to 60% of consumers are “on the uptake for”. He stressed that the key to upselling is being clever with what you decide to sell. He added: “There are plenty of upselling opportunities you can do now”
9. Incentives for staff
Ratcliffe explained he was utilising certain staff incentives, in order to maintain good relationships and keep staff that want to stay in their teams.
He explained the team are looking at ‘spend per head’ initiatives and actively discussing what incentives staff members would like to see as a team. As well as what specific factors would motivate them to work at the site.
By doing so, he said he feels this would foster staff loyalty and helps to build a good team. Ratcliffe explained he is also aiming to promote internally, providing more incentives for staff looking at progressing. Despite this, he added: “The staffing situation is still difficult.”
10. Ensuring ‘better than ever’ customer experiences
Cheshire Cat’s Tim Bird said: “The key is that as a business we stay focused on the top line, building turnover through being consistent at what we do best and creating more great memories for guests and customers.”
He also explained that he felt that collectively “selling our way out of challenges” was the way to tackle issues such as national insurance an living wages. He urged operators to avoid hiking up prices and cutting staff and closing on “down days” emphasising that the main way through, is to sell as much as possible.
