The impact of the last few years, from COVID-19 to the cost of living crisis, has meant that costs on the restaurant sector have been constantly squeezed, with a continued focus on how these businesses can maximise saving strategies. There is a concern from operators that, given there are minimal additional cost savings to be made, how will they deal with the impact of the additional cost increases from the Budget.

Recently, we sat down with some of our key clients and contacts within the restaurant sector, operating with less than 20 sites, to discuss these industry concerns and their plans to tackle them.

Price increases for consumers

One of the most obvious ways restaurant operators have been looking to mitigate the cost increases, is by passing this additional cost onto the consumer. The general consensus across the board is that whilst operators are concerned as to what percentage increase would be accepted by the consumer, some sort of price increase would undoubtedly be required in order to combat the impact of the Budget.

Some businesses feel as though they have already increased their prices as much as their consumer would be willing to pay, and have accepted that the extra cost would have to be absorbed, hitting the bottom line. However, there has been some hope that this could lead to a greater price differential between them and their competitors, which would help drive demand / loyalty.

Cost savings

Many operators have been implementing purchasing companies which has helped with streamlining and consolidation of accounts and better negotiating of contracts. Whilst this does allow a cost saving opportunity, concern has arisen as to whether the saving outweighs the possible impact on quality.

Other cost saving initiatives suggested within the sector include, limiting payment options to reduce credit card charges and handling of cash, and the possible introduction of cover charges, which is part of the continued conversation around “bill shock” versus “menu shock”.

Labour savings

Another way operators have been looking to save, is by reviewing staffing and operating hours which includes:

Use of agency workers:

In recent years, a number of hospitality staffing apps have emerged connecting individuals looking for part-time, flexible hospitality work, to businesses in need. Whilst the use of agency staff has some benefits in allowing businesses to adjust their headcount depending on demand, there has been some concern over the quality of staff. Often and understandably, contractors can lack the expertise and knowledge that contracted employees staff members can bring, which adds to the positivity of the consumer’s experience.

Reviewing staffing and operating hours:

Some operators have been reviewing their shift and break times, as well as discussing the possibility of reducing opening hours and / or days. However, with this comes nervousness over restaurants removing themselves from the market at certain times, and confusing customers with changing opening hours.

Fall in covers

Across the industry, restaurants have felt a fall in covers, with reasons for this including a more health-conscious society (now wanting to drink less), corporate businesses now reducing spend, and a reduced desire for the ‘late night market’. There is also a concern that the sector is becoming too expensive for the younger demographic which is impacting covers.

Operators have been discussing implementing late night drinks promotions and discounts in the hope to drive business back to these hours.

Use of technology

Many operators have been utilising technology in order to help grow demand and engagement. This has included AI guest satisfaction surveys to help drive return custom, Pay at Table technology to increase the number of restaurant reviews by directing the customer to review sites immediately upon payment, and the increased use of internal training software to help maximise employee engagement.

In conclusion, the restaurant sector continues to face significant challenges when it comes to cost-saving strategies, with many businesses forced to make difficult decisions. While some are finding innovative ways to streamline operations, and implement technology to improve efficiency, the constant pressure to balance quality and affordability for customers often leaves little room for margin. As a result, restaurants must continue to adapt, embracing creative solutions while navigating an increasingly volatile economic landscape.

As always, our Hospitality team is on hand to support your business and answer any queries you may have. Please do not hesitate to reach out to Andrew Ball, Senior Hospitality Partner, at, aball@haysmac.com, or Nicky Dockree, Senior Manager, at ndockree@haysmac.com.