Joining coffee shop loyalty programmes has never really been my thing as I tend to use many different venues, and having a wallet – virtual or real – stuffed with loyalty cards has always felt like too much of a faff. But I’ve reassessed this view as I’m now calculating that one free coffee for every ten purchased is clearly the equivalent of 10% off the price of each cup.

 

This wasn’t a particularly big deal until now. But when you are spending around £4 for a cappuccino in the morning, and maybe the same for a flat white in the afternoon, then the sums become meaningful. Prices for those regular caffeine fixes have been on a tear, and it’s hardly surprising when every cost involved in running coffee shops has been on the increase.

 

The one that stands out, and is a particularly big deal for the sector, is the cost of beans. Wholesale Arabica beans – the most popular variety – moved above $4 a pound for the first time last month, which represents a doubling over the past year. It was less than $2 a pound in January 2024 and hit a record $4.30 mid-February this year, according to futures contracts traded in New York. And the predictions are that the price has further to go on its upward trajectory. 

 

Around a year ago, the coffee shop industry was pretty bullish. The UK’s independent coffee shop market grew by 2.2% over the year to March 2024 to reach more than 12,200 outlets, according to World Coffee Portal. When it polled industry leaders, nearly twice as many believed trading conditions would improve for independent shops over the next 12 months, having survived a painful cost-of-living crisis, rather than anticipating a deterioration of sales. 

 

One year down the line, the outlook looks less appealing when combining the impending Budget increases to employment costs with the escalating coffee price potentially impacting sales. Coffee is undoubtedly an affordable luxury compared with a Hermés bag, but there is only so much that can be absorbed by consumers before they cut back consumption.

 

Against this backdrop, it will be increasingly tough for independents. That is why we are seeing the largest independent in the market, Caffe Nero, being approached by smaller operators. Gerry Ford, founder and group chief executive of Caffe Nero, told Propel: “You wouldn’t believe how many people are coming to us now. Some of it because of [our] reputation and some of it because they’re stuck, and they don’t have anywhere to go. If you are an independent operator trying to figure out what to do with your business, we have started to become a logical go-to player.”

 

Caffe Nero has good form, having recently acquired FCB Coffee and 200 Degrees, and prior to that Coffee#1, as the company has recognised the upside of running multiple brands in order to avoid becoming a ubiquitous single branded gorilla that saturates the UK market. Ford has expressed his desire to avoid falling into the trap of Costa in the UK or Starbucks in the US, where they lose their “special” appeal from having far too many outlets.

 

Operating a multi-brand organisation was the strategy deployed back in the pre-covid-19 days by Coffeesmiths Collective. Utilising the roll-up approach, it rapidly purchased stressed branded coffee brands including Baker & Spice and Nordic Bakery, and various outlets from the failed Filmore & Union and CoffeeWorks Project businesses. These sat alongside its Department of Coffee and Social Affairs branded units.

 

What looked good on paper ultimately failed as a result of Coffeesmiths having insufficient back-office infrastructure and support services into which it could plug the various acquired brands. Caffe Nero is a very different beast and has the back-end operations to fully leverage synergies and enjoy scale benefits – whether that be purchasing in volume or centralising the roasting of beans and kitchen facilities for food production, along with finance, HR and other such essential functions.

 

As the pressure continues to mount on small independent coffee operators, we will undoubtedly see more consolidation in the sector, with Caffe Nero playing a starring role. And maybe we will see it joined by a well-funded vehicle that can succeed where Coffeesmiths Collective failed.

 

The hospitality industry has long been the beating heart of communities across the UK. From the independent pub at the corner of a bustling high street to the family-run café that serves as a second home to its regulars, these businesses shape the very essence of British hospitality. And yet, here we are again – another financial hurdle, another headache, another round of: “How on earth are we going to pay for this?”


April 2025 will bring a significant rise in employment costs, including increases in both national insurance contributions (NICs) and the national living wage. While these changes may seem like necessary economic measures on paper to some (outside of the sector), their impact on operators across the sector – both big and small – will be profound.

 

The UK hospitality industry employs more than three million people, contributing billions to the economy. However, it is now facing an unprecedented financial challenge. According to recent UKHospitality analysis, more than 1.2 million hospitality staff are currently not eligible for employers’ NICs. In April, that number will be slashed to just over 450,000 people, meaning an additional 774,000 workers will now be eligible for employers’ NICs, costing the hospitality sector an additional £1bn. When combined with the planned rise in the national living wage, businesses will face significantly higher staffing costs at a time when margins are already tight.

 

For operators already grappling with soaring food and energy costs, this is yet another storm to weather. Bigger businesses will see massive cost increases, while smaller operators will struggle to stay afloat. But the reality is, the entire sector will feel the impact.


As an ex-operator, it’s so obvious when service isn’t what it should be – when staff are disengaged, tired and, let’s be honest, mentally calculating how long they have left of the shift. Customers can tell, too. And that’s a bigger problem, because the only way we keep them coming back is by ensuring they have a brilliant experience every time they step through the door. That’s why, no matter how tough things get, cutting back on service quality isn’t an option.


So, where do we go from here? How do we continue to protect the businesses that define the fabric of our towns and cities?

 

1. Invest in employee satisfaction
. Happy staff = better service = happy customers. It’s a simple equation, yet one that too many businesses forget when times get tough. A well-looked-after team will always go the extra mile for customers, creating the kind of experience that turns one-time visitors into regulars and gets them spending more on every visit.

2. Focus on increasing sales
As mentioned in my point above, team members can contribute a great deal to the sales improvements a business needs through great service, but operators should double down on increasing sales via their local community, marketing, events and entertainment and expanding offerings. Incentivising our teams appropriately is also a great way of getting the whole team on board with what you are trying to achieve.

3. Consider smarter operations
Finding efficiencies without sacrificing quality will be key. Whether through improved scheduling, careful cost management or streamlining back-of-house processes, small changes can add up to meaningful savings. It’s about working smarter, not just harder.

4. Recognise the role of tips
Tips have always been a vital part of hospitality, providing an additional incentive for great service. Unfortunately, it is a sight too often seen where operators don’t want the additional burden of running a tronc so only accept cash tips – this is no incentive for the teams and can demotivate them from being your best ambassadors. Ensuring the right tipping practices are in place, and that tips are distributed fairly and transparently, can help staff feel valued and motivated while easing financial pressures.

5. Understand the tax benefits of tips
Unlike wages, tips that are distributed directly to staff are not subject to NICs, making them a crucial tool in easing cost pressures. By implementing a compliant and transparent tipping system, businesses can ensure their teams benefit from every pound left by a customer – helping to offset wage increases without adding additional tax burdens. It’s one of the few financial lifelines that still exist for operators, and it’s one we need to make the most of. There’s even the chance to reclaim overpaid NICs on tips for up to a six-year period!

6. Industry collaboration and advocacy
This is a time for the industry to come together. Sharing best practices, supporting each other and advocating for policies that protect the sector will be crucial. We’ve seen resilience in hospitality time and time again – this challenge is no different. If we don’t stand together and shout about these issues, no one else will.


Yes, this is another scary time for hospitality. If we focus on protecting our people, ensuring great customer experiences and working together as a sector, we can weather this storm.


Hospitality has always been about more than just business – it’s about community, connection and creating spaces where people come together. Let’s make sure we fight to keep it that way – one pint, one plate and one perfectly timed check-back at a time.

  

As we all know, hospitality is a people business, and people have emotions, views and habits that they may be resistant to changing. This means decision-making can be an emotive subject, and labour costs and targets are probably one of the most sensitive areas to address. Opinions vary widely on what constitutes the “right” labour cost, making it one of the most hotly debated topics in the business. While some managers believe that senior management’s cost-cutting measures hinder sales, especially during peak periods, others argue that excessive spending leads to inefficiencies and wasted resources. Striking the right balance is no small feat.

 

Often when these managers leave the business to run their own, they immediately invest in labour with the sound knowledge that their business will thrive. They see an opportunity to prove themselves right and show their previous bosses to have been mean, corporate profit chasers. But typically, after about 12 months of investment in labour, which often translates to losses, they hit the cold economic reality that they cannot afford as many staff and have to cut back. In doing so, they may inadvertently undercut their own operations, leading to reduced service quality, and, in some cases, the collapse of their businesses. These experiences impart a hard-earned lesson: overstaffing is far riskier than understaffing.

 

The key takeaway from these scenarios is that effective labour management requires precision. A corporate target for labour costs is futile if managers lack the training to achieve it. Understaffing and overstaffing are symptoms of the same problem: a failure to manage labour strategically. For instance, running a shift with five team members can produce dramatically different outcomes, depending on the quality of leadership and planning. Without effective shift leadership, even the best resources can be underutilised, leaving teams feeling overwhelmed and wrongly attributing poor performance to understaffing.

 

This is where the importance of top-down labour management and training really becomes noticeable. Setting standardised labour practices and clear expectations alongside introducing feedback loops and hands-on training will be extremely effective in embedding better labour practices into the business. 

 

A poorly managed afternoon shift, for example, might neglect critical slack tasks, setting the evening team up for failure as it struggles to catch up. This domino effect not only impacts operations, but also affects team morale and customer satisfaction.

 

This underscores the industry’s pressing need for labour management training. Training not only equips teams with practical skills but also helps change entrenched habits that hinder progress. Poor habits, such as inefficient time management or inadequate task prioritisation, are pervasive. Training teams, managers and operations managers to be better is the only way to help them. But how? Breaking these habits requires a carefully balanced approach that combines enforcement with support – what might be termed the “carrot and stick” method. Tightening rotas without providing the necessary training leaves employees frustrated and ill-prepared, while training without enforcing changes risks making the effort redundant. It is only by combining these two elements that businesses can break free from the cycle of poor service and high staff turnover.

 

The path to improvement cannot be rushed. Effective change requires targeted training that addresses specific aspects of labour management. For example, quieter shifts present unique opportunities to reset and prepare for busier periods, but these opportunities are often wasted without proper training. Similarly, kitchen management demands specialised training to ensure efficiency and coordination in one of the busiest and most critical areas of any hospitality business. Each aspect of labour management comes with its own set of challenges, and each requires a tailored training programme to address them effectively.

 

Ultimately, the success of any labour management strategy hinges on a commitment to investment – not just in staffing, but in training. A well-structured training budget is not an expense; it is an investment in the future success of the business. Approaching labour with the same mindset as before but with fewer people is a recipe for failure. Instead, the focus must shift to delivering the right training, supported by precise execution and a willingness to adapt. This is the path to long-term success in an industry where the demands are constantly evolving.