With so many measures being pushed onto operators from external forces, at times it can be hard to feel in control of your own destiny.
That is surely the case for business owners across the country as changes to National Insurance Contributions and the National Minimum Wage become a reality next month (April 2025). The changes were delivered in a Budget that UKHospitality Chief Executive Kate Nicholls warned could “risk bringing growth to a grinding halt.”
The impact the Budget is going to have on the sector has been well documented, but here are some of the headlines:
• The rate of employer National Insurance is going up from 13.8% to 15%. This applies to earnings above £5,000 per year, down from the previous threshold of £9,100.
• At the same time (April 6th) the National Minimum Wage is being raised to £12.21 (from £11.44) for 18 to 20-year-olds and to £10 (from £8.60) for under 18s
• Business rates relief is being cut from 75% to 40%
The result is more headaches and more costs for hospitality businesses. These government enforced measures are the ‘uncontrollables’ – a bit like the weather – the factors outside of your influence that make a serious impact on your bottom line. At times it combines to feel like the perfect storm.
There are two essential ways of dealing with this. First, knowledge. Know what you are faced with and plan accordingly. The second is taking charge of the areas you can influence – the controllables. You can’t make the sun shine but you can be ready for when it does, as well as preparing for rainy days.
With payroll costs and tax bills going up, a good starting point is to closely examine your rotas to make sure you have the right people and the right numbers on at any given time. Labour is the biggest operations cost for any hospitality business, making up to 40% of your outgoings, so savings here can make a big impact.
Labour deployment tools like Polaris Data help businesses optimise staffing levels based on demand forecasts. This ensures that the right number of staff are scheduled at peak times and helps our clients save around 10% on labour costs. This highlights how sites are performing and where resources should be deployed. The rota system also flags when someone is going to go over the National Insurance threshold and adjusts automatically to what contributions should be. It means you can be smart with your scheduling and could balance the hours between more employees to keep the NI contributions lower.
An image of Polaris Data’s Rota Planned, showing shofts and how much they will cost
Another area to watch is waste. Millions of revenue is lost every year in food waste, with the Waste and Resources Action Programme (WRAP) estimating that wasted food in hospitality amounts to around £3.2bn annually.
Now is a good time to review your menu. What works, what doesn’t, what items are regularly left on the plate? This data will help you better understand what meals could be replaced or reimagined to reduce waste and costs.
A fifth of waste is from food spoiling, so storing and effective stock taking can help here. The Polaris Quantum system handles menu management, stock inventory and procurement, saving you money and time.
While you can’t completely control customer behaviour you can control your efforts to reach and retain them.
They too will be impacted by the continually challenging financial environment, so if you are maintaining your prices or offering deals be sure to let them know. Your loyalty should be rewarded in turn by your customers. You can even create loyalty schemes, using technology or a simple stamp card, to encourage repeat custom and potentially collect useful data.
If you do have to raise prices try to create great events and experiences to showcase your offer and to prise customers away from the competition of home entertainment.
As ever with hospitality, the challenges come thick and fast but there is support at hand to help you navigate these times and to take stock and stay in control of your business goals. Chat to one of our team today:
