Titled ‘Business Models in HE Catering - 2025 Update’, the report captures evolving trends and challenges within higher education catering, based on comprehensive survey data from institutions nationwide.
The findings highlight the financial pressures on catering services and the strategic responses universities are taking. According to the report 69% of universities had a catering deficit in 2025, which has increased from 56% in 2017.
For some universities, the deficit sits at £500,000 or above. The number of institutions operating at a surplus has dropped to zero, underlining the intensifying financial strain across the sector.
The majority of universities (83%) manage their catering internally, citing concerns over performance quality and contractual inflexibility for the reason for direct management.
Mark Kassapian, managing director at Litmus Retail, said: “Universities are navigating a deeply challenging commercial landscape. This doesn’t just impact budgets - it directly affects the student experience. In fact, over 63% of universities acknowledge that financial constraints are negatively impacting student wellbeing.
“Imagine a scale, with catering profitability on one end and student experience on the other. The closer you get to one, the further away you move from the other. Of course, it’s all about balancing the two. In an era where attracting and retaining student numbers is essential, the need for strategic cost management - balancing financial sustainability with high-quality services - is more critical than ever.”
Key insights from the report include:
- Rising deficits: The proportion of universities with a £250,000–£500,000 deficit rose from 8.5% to 21.1% since 2017.
- Financial KPIs dominate: Four out of the top five key performance indicators in higher education catering are now finance-focused.
- Cost-saving initiatives: Common measures include reducing operating hours, closing outlets and streamlining staffing models.
- Future trends: Forecasts highlight a continued focus on flexibility, digitisation and greater integration with sustainability goals.
The report also revealed 80% of universities have introduced new types of catering outlets to better meet student needs, with coffee shops and cafés the most common additions.