The latest Future Shock report complied in partnership between UKHospitality and CGA demonstrates how expectations of a swift sector recovery have been dashed.
Like for like sales in the sector are back to 2019 levels, buoyed by takeaway and delivery sales which are up 107% in May 2022 compared to May 2019. There has been a 1% net increase in the number of licensed premises in the UK between December 2021 and March 2022.
Kate Nicholls, chief executive of UKHospitality, said: “The sector has proved its value to consumers post-pandemic, with sales back to 2019 levels but the labour shortage, inflationary cost pressures and dropping consumer confidence make it extremely difficult for any business to achieve real-terms year-on-year growth at the moment and there is little prospect of a respite on the horizon.
“Operators will continue to work hard and creatively to meet these challenges and with positive action from Government, such as root and branch reform of business rates, a system that disproportionally taxes hospitality, the sector will be able to drive investment in local economies, create jobs and play a full part in the UK’s economic recovery.”
According to the report one in seven hospitality jobs are now unfilled, nearly half of businesses (45%) have reduced their trading hours and a third have had to close for at least one day. Year-on-year inflation was running at 10% in the first quarter of the year, with little prospect of a drop in the near future and four in five (83%) business leaders in the sector reported being concerned about ongoing foodservices price rises."
With energy costs set to soar again in the Autumn, four in five of consumers think they will have to reduce their visits to hospitality venues as the crisis bites.
Karl Chessell, director - hospitality operators and food, EMEA at CGA by NielsenIQ, added: “Hospitality remains a very attractive sector to consumers and investors alike, and appetite for the experiences it provides is undiminished. However, while underlying demand is high, inflationary pressures are now squeezing consumers’ spending and hurting both profit margins and investment plans.
“Severe shortages of staff will continue, and business confidence – which was solid at the start of the year – has been impacted. These challenges are largely out of hospitality’s hands and while the sector received solid support during the pandemic from the Government, which rightly recognised its importance to the UK economy, it deserves more help now.”