Hospitality has been a driving force for the UK and European economies for years, employing 3.2 million people before the pandemic and generating £38 billion in tax revenue for the UK government. Providing job opportunities for young people and students and inspiring young entrepreneurs to launch enterprises of their own, hospitality was a dynamic and booming sector before the initial complications of COVID, and the many challenges that followed.

Today, hospitality remains an important source of employment and joy for communities, but businesses are being hit hard by food price inflation (dipping modestly in May but remaining one of the highest rates among G7 nations), the end of the Energy Bill Relief Scheme (EBRS), and other factors like supply chain disruption and staff shortages.

With food price inflation (especially fresh food) much higher than CPI and hospitality businesses requiring high energy output, the sector is more heavily influenced by these factors than most. Research carried out by Peckwater Brands revealed that 44% of businesses were operating at a loss, with more than half (53%) negatively impacted by the rising cost of goods and exactly half by record energy bills.

While the government has announced new measures to help small and medium enterprises (SMEs) cope with rising costs, the measures enacted are not enough to discount the wholesale challenges that hospitality businesses face. Decision-makers are going to have to find a way to snatch success from the jaws of defeat, and the key to doing this involved two steps: going lean and going for zero waste.

Going lean

With the cost of doing business high, the top priority for businesses should be managing expenses effectively and developing a lean, optimised business model that can remain sustainable in today’s climate.

As food prices skyrocket and supply chain disruption remains commonplace, the first step the cafes and restaurants should consider when trying to go lean is menu optimisation. Constantly assess and adjust the menu to avoid high-price items, while any dishes containing high-cost ingredients should be repriced accordingly. 70% of those surveyed said they anticipated raising their prices in the coming year, but with a well-planned menu, businesses can keep prices down and continue to attract customers.

Decision-makers must take a similarly optimisation-focused approached to their suppliers and supplier contracts. Overreliance on a single supplier can exacerbate disruption, so diversifying supply lines can avoid shortages. What’s more, diversification presents an opportunity to renegotiate contracts and ensure the best available prices going forward.

Getting a great price on supplies won’t have the full intended effected if a significant proportion of produce goes to waste, which is why a zero-waste mentality is the other key priority for businesses.

Going for zero waste

A lean, zero-waste approach to operations and workflows is any hospitality entrepreneur’s best path to overcoming today’s adverse economic conditions. A full review of workflows comes first, ensuring that staff are trained up on cost-saving techniques and energy-efficient practices, and that inventory management processes have been optimised to limit waste.

While nothing can be done to lower energy prices, there are many steps that can be taken to lower energy consumption within kitchens. While the upfront cost of energy-efficient equipment might be off-putting, they represent a valuable step towards sustainability and lower overheads in the long run.

While few kitchens can operate without fresh produce, the relatively higher price inflation for perishable items in addition to the greater rate of spoilage can be a major cash sink. Stable, non-perishable foodstuffs can keep inventory costs down and reduce food waste.

Going multibrand

These approaches can go a long way towards optimising a business's workflows and decreasing overheads, which boost revenues and help keep hospitality businesses afloat. The ultimate step towards optimisation, however, might be the multi-brand approach.

Integrating a secondary virtual brand into a kitchen's operations that shares core ingredients with that kitchen's primary fare can be a major boost to revenues. By adding an auxiliary, delivery-only menu to its workflows, a business can increase order volumes and revenues without meaningful increases to overheads.

Mentality of success, not survival

With planning, resourcefulness and discipline, hospitality businesses should be able to aspire towards success, not just survival. A business that runs lean, wastes little and maximises the output it is capable of can thrive even in spite of the challenges that hospitality businesses face today.

Time and again, cafés, bars and restaurants have shown resilience and ingenuity to overcome obstacles and hard times. With the right mentality and approach, hospitality businesses can return to being a cornerstone of the economy and a source of pride for communities.

About Peckwater Brands

Peckwater Brands (PWB) is a delivery franchising expert, helping restaurants and kitchens of all sizes benefit from the fullest demands of the market by streamlining the process of embracing virtual brands and multiple-franchise solutions. Working with partners across the hospitality spectrum, they can transform any kitchen into a multi-franchise operation, integrating with their existing operations and opening them up to vastly increased demand across different brands and cuisines.