The recent UK Budget has had a significant impact for the hospitality industry. The increase in the National Living Wage combined with the increase in Employer’s National Insurance contribution has been forecasted to increase staffing costs by 10-12% for the majority of businesses. Assuming the increase in employment costs is 12% and that salaries are 32% of revenues, that is a 3.8 percentage point hit to EBITDA.
In a recent survey it was estimated publican’s make a profit of around 12p per pint sold; they don’t have sufficient margin to absorb this increased cost. Similarly, customers have been voting with their feet. Around 6.92% of pubs close every year in the UK, in 2023 it is reported that 769 pub businesses became insolvent, an increase of over 48% in 2022.
The only solution for businesses is therefore to review their other operational costs. Energy costs can be reduced by over 30% by adopting sustainable practices; more if renewable energy sources can be installed. There are financial structures available that can absorb the upfront costs of PV panel installation, for example.
In addition to reducing energy consumption, we can review your supply-chain in full to assess how we can save you money and also reduce your carbon footprint at the same time.
Sustainability can be a maze, full of acronyms and unfortunately green washing. Our experts have been working in the various industries for decades and can guide you through the challenges. At GQ we offer a free assessment of your business, that assessment is likely to find the savings you need to mitigate the additional costs imposed by the Chancellor. It will also give you the guidance you need to start, or turbo charge, your journey to a sustainable future.
