Hospitality has faced tough years before, but this Budget sets a new benchmark for pressure. Wage rises, holiday taxes and monumental increases in rateable values aren’t just numbers on a page – they’re existential threats for operators across the UK.

 

This week’s Budget is extremely damaging for hospitality. The cumulative impact of the aforementioned cost increases will wipe out the 5p business rates discount before it even lands. That means more pressure on already struggling businesses and fewer job opportunities – particularly for young people who rely on hospitality as their first step into work.

 

The numbers are stark. Accommodation businesses face rateable value hikes of 76%, pubs 30% and restaurants and cafés,14%. These aren’t tweaks – they’re seismic shifts. For many, it could be the difference between staying open and shutting the doors.

 

So, let’s be clear: a 5p business rates discount is woefully short of what’s needed to offset these costs and redress the damage. It’s exactly why UKHospitality urged the government to use the maximum possible discount, 20p, a step that could have delivered genuine relief. 

 

And just days before the Budget came another blow: the government’s screeching U-turn on holiday taxes. This move contradicts its own claims to want to reduce the cost of living. Our analysis shows domestic holidaymakers could be hit with up to £518m in additional tax, making holidays in England more expensive and effectively increasing the VAT rate to 27% – one of the highest in Europe.

 

The government has paused for consultation, and we will be working hard to impress upon the chancellor’s team the very real impact this unexpected U-turn will have – not just on operators, but on consumers and communities.

 

All of this matters because every extra pound in tax and overhead means fewer jobs, higher prices, less investment and more closures. These costs don’t stay in the sector; they hit consumers and keep inflation higher for longer. The Office for Budget Responsibility has already warned about this, and hospitality is right at the heart of that dynamic.

 

Once again, hospitality and the high street are carrying the heaviest load. The government is balancing the books disproportionately on our backs, creating a two-tier economy where some sectors thrive, while ours fights to survive. That’s not sustainable or fair, and it’s certainly not good for growth.

 

We’re not asking for special treatment, we’re asking for fairness. We’re asking for recognition of the role hospitality plays in driving growth, creating jobs and supporting communities. We need a tax system that encourages investment, not punishes it. Right now, the tax burden on our sector is the highest in the economy. That’s not a badge of honour – it’s a concerning warning sign that must not be ignored.

 

The only way to cut the cost of living is to cut the cost of doing business, and this Budget does the opposite. Without urgent action, businesses will close, jobs will go and communities will suffer. 

 

Despite everything, hospitality keeps going. Against all odds, we remain the beating heart of communities across the UK. 2025 has been another year of adversity, with relentless cost pressures testing even the most resilient businesses. But ours is a sector that continues to demonstrate remarkable spirit and a willingness to battle on.

 

UKHospitality has led the way in quantifying that impact with the launch of our Social Productivity Index, a groundbreaking analysis showing that hospitality is not just an economic engine, but a driver of social value. We rank first for employing under-25s, part-time workers and non-graduates. We’re in the top five for gender balance, ethnic diversity and geographic reach. These are the metrics that matter when building a fairer, more inclusive economy.

 

We’ve also helped hundreds back into work through government-backed Sector-based Work Academy Programmes, providing participants with a hospitality skills passport – a universal entry standard giving jobseekers the tools they need to succeed. Since May, 162 entrants have been awarded the passport, with almost 90 pending certifications and 305 more starts in the pipeline. These initiatives show what hospitality can deliver when given the chance. But resilience has limits. Next year will be tough – seven years on the bounce since the start of the pandemic. 

UKHospitality will continue to be the leading, single and unified voice for hospitality, and we will continue to make clear at the highest levels of government the action we need to see to allow our sector to thrive. We are clear: you cannot balance the books on the backs of the high street. Something has to give, and costs must come down. 

Following on from the Red Tape Review, which concluded on 6 November, we have, within 20 days (and one day after the chancellor’s Budget) the National Licensing Policy Framework for the hospitality and leisure sectors (NLPF). The NLPF contains seven sections and is issued on behalf of the Westminster government by the Department for Business and Trade. It relates to the operation of the Licensing Act 2003.

 

On 5 November, I spoke at the Propel Multi-Club Conference and expressed a hope that central government would use the NLPF as an opportunity to reset the approach to hospitality and enable this sector to deliver positive outcomes to local economies and support the national growth strategy. So, let’s see if that hope has materialised. I will now seek to quickly highlight the key points, but please watch this space as we will undertake further deep dives into its content over the next week or so.

 

First, it is pleasing to see in the foreword an acknowledgement that if support is provided to sector, then it will help create places where people want to live, work, visit and invest. “If we are to support it, we need to provide these sectors with the ability to invest and adapt so that it can provide the types of services that people today want, need and deserve.” It continues: “We need a licensing system that is flexible and responsive – a tool for enabling innovation and investment, not just managing risk.”

 

Within the introduction, this mandate is re-endorsed with a confirmation the licensing system should enable investment in existing and new venues, provide extended consumer choice, support regeneration and, by a better regulation, reduce unnecessary bureaucracy on businesses so that they can adapt quickly.

 

The introduction describes the NLPF as a strategic steer by government to those involved in licensing. It describes them “stakeholders” – but we can only assume that this is directed to the licensing authorities and the police. The third section relates to the scope of the framework, and interestingly, it confirms the framework will not apply to off-trade premises, or where the sale of alcohol for consumption off the premises is the principal operation.

 

Thereafter, at section four of the framework, it starts to address the areas that should be considered in a different way and lists key headings as follows: supporting a changing hospitality and leisure landscape, status and legal effect, strategic direction for a modern licensing system. This last section concludes with an invitation to licensing authorities to adopt, going forward, a strategic based approach that supports long-term successful businesses and communities alike.

 

In my talk at the Multi-Club Conference, I spoke of a lack of fairness in the current process, and in essence, asked if the appropriate level of respect was afforded to hospitality for the economic returns it generated while still acknowledging the potential adverse impact on amenity to residents. This section seems to acknowledge the requirement for a balanced and fair approach for all the parties.

 

The framework concludes with sections on implementation, particularly focusing upon the benefit of partnership working being the starting point for conversations when issues arise. This is a new start, hopefully a reset of the mindset, and the beginning of a more balanced approach, which contains as one of its principal determination criteria an acknowledgment of the value to the economy of hospitality.

Despite having eaten probably a couple of thousand meals in various restaurants over the years, I can vividly remember a specific dinner with my parents in the mid-1970s, at a Berni Inn in the centre of Doncaster. It’s not that the dishes were particularly memorable – undoubtedly prawn cocktail, steak and chips and Black Forest gateau – it’s more that it might well have been the first proper meal out I’d experienced in a restaurant.

 

Eating out just wasn’t that much of a thing back then. It really was something of a luxury that was limited to special occasions for the majority of the population. As a family, we were unusual in dining out on Christmas Day and on Easter Sunday, but beyond those religious celebrations, a restaurant visit was a very rare beast indeed.

 

The eating out landscape at the time was a modest affair, including a chain of 140-plus Berni Inns, which was joined by Beefeater and Brewers’ Fayre. Meanwhile, Wimpy eventually grew to 500 outlets, while Kentucky Fried Chicken hit the UK in 1965, a good decade before McDonald’s, Burger King and Pizza Hut tentatively opened their first outlets here. There was also a rapid expansion of Indian restaurants, along with other “exotic” options, appearing.

 

Over the intervening years, dining out has moved from being a luxury to almost a birthright for many people. The casual dining category was created to cater for the growing percentage of the country that expected to eat out very frequently and, increasingly, on a whim. It wasn’t even a treat, never mind a luxury. Dining out on autopilot was possible, serviced by an explosion in the number of branded restaurant chains that delivered what was necessary – average food at average prices. 

 

Matt Snell, former chief executive of casual dining group Gusto Italian, suggests: “Casual dining is fundamentally flawed, certainly in the middle, where prices are going up and covers are going down. The affordable midweek treat, because you can’t be bothered to cook, has almost disappeared.”

 

Certainly, since covid-19, the scenario has changed dramatically, with prices rising and wages having not kept pace. Chipotle has found customers between the ages of 25 and 35 years old are particularly challenged, according to chief executive Scott Boatwright, who recently cited headwinds like unemployment, increased student loan repayments and slower real wage growth accounting for inflation as hurting that particular group of consumers. “We’re not losing that customer – they’re just coming less often,” he says.

 

The youngsters are not the only ones squeezed. As many as 49% of people across demographics surveyed before covid-19 stated they were eating out weekly, but this had declined to 38% in 2024, according to CGA by NIQ. This has no doubt dipped even further over the past year, especially as Savanta found 43% of people suffered “bill shock” the last time they ate out versus only 30% back in 2017, when it first undertook the survey.

 

Taking advantage of this scenario are the delivery firms that continue to push consumers into dining at home, thereby eating into what could well have been dine-out revenue. Add on to this the increased efforts by the supermarkets to pitch their premium ready meals directly up against the alternatives in restaurants, and it paints a very challenging picture. 

 

Maybe we are experiencing a generational shift in the way people engage with eating out. We have gone beyond the pre-pandemic era of behaviour, when it became a very functional exercise to eat out and little thought went into choosing which casual dining venue to visit.

 

Let’s not forget that the recent generations – Generation Z and younger – have been the first ones not to have a higher standard of living than the previous generation since records on such things began. Generation Z et al have new thresholds on what they will pay for goods – I baulk at a takeaway sandwich at £8 and a smoothie at £7 but younger diners have no such issue – but even they are now being priced out of the casual dining category and wider eating out market.

 

It could suggest a return, to some degree, to the days when dining out was more of a treat or even a luxury. However, this might not necessarily translate into less overall spending across the industry, as evidenced by my own habits over the years. These have typically involved dining out less often but in better places, with a focus on choosing venues and occasions that are much more likely to deliver memorable meals and superior overall experiences. 

 

While many retailers have lost sales to online rivals over recent years, the better performers have been apt to suggest that consumers are not actually bored with going out to the shops, they are bored with going out to boring shops – whatever the price. Hospitality needs to take note.

Deployment is a word that has been bandied around the hospitality industry for a long time. At S4labour, we invented it. But what does it really mean, what are we trying to achieve, and how do we become great at it?

 

In essence, all we are ever trying to do in hospitality is match supply and demand. Too many staff standing around is wasted cost and wasted money. Too few staff, and you deliver a poor guest experience, leading to comped meals, lost sales and, at worst, unhappy guests who tell others and never return. There are only so many jobs the team can do to fill the time if you aren’t busy.

 

That’s why we, and others, pull sales data, forecast sales and then create a sales profile to write a rota against. In many businesses, you see two daily peaks – lunch and evening – when people want to eat or drink. Our job is to have enough staff when it’s busy and not too many when it’s quiet.

 

Of course, there are barriers: shift lengths, minimum hours, staff availability and skill levels. And it’s not just about matching supply and demand within a day – it’s also about matching the total number of staff we have at different times of year. It’s easy to produce the perfect rota for Christmas week, but where are the staff?

 

But deployment is way more than just having the right number of people; it is then about using them in the right way. Recently, I visited a farm shop that had clearly done a brilliant job attracting customers. But as we finally got our coffee after the excruciatingly cold pumpkin making, it was fascinating to watch. There were queues out of the door but loads of empty tables. When you watched the staff, they had plenty of people, but too many of the people were neither trained nor managed. 

 

The coffee and cake line was riddled with bottlenecks. Half the floor staff were wandering around doing their best to look busy, but actually, were doing nothing. The managers were working very hard but ignoring the people wandering around. Perhaps they didn’t have time to train them, perhaps they didn’t want to, or perhaps they thought it was quicker to do the job themselves.

 

Deployment is about having the right number of trained team members, with the right roles and the right objectives for that role. A well-motivated, energised team member is infinitely more valuable than a poorly energised team member. Without this, as I witnessed at the farm, chaos ensues.

 

So, the hierarchy of deployment is simple:

1.  The right number of people at the right time

2.  The right skills for the shift

3.  The right brief of responsibilities

4.  The right management on the shift

 

If any one of these is missing, the shift won’t perform as it should. And we all know the circularity of the difference a good manager, a well-trained person and a well-structured shift makes. As the cost of staff goes up, the effort and energy we all need to put into training, shift management, shift briefing and the right number based on all the above factors can make a significant difference to the shift.

 

I used to say that running at 25% slack was a good job. The truth is that if you invest in all the above skills, you get the number down to nearer 15%, and that makes a massive difference to the P&L. And the reality is, we have no choice. With financial pressures mounting, deployment is no longer optional. It’s a commercial necessity.

Ever hear the one about the olive that saved $40,000? In 1987, American Airlines removed one single olive from each of its salads in first class and managed to shave a significant amount off its annual costs, with zero impact on customer satisfaction. It acted on data that showed its passengers rarely ate the olives. And it’s a brilliant example of how a small operational change can have a massive impact. 

 

And it’s a story that still rings true today, especially considering operating costs will continue to rise following the new Budget. With the food sector built on thousands of tiny decisions across ingredients, prep, pricing, design and layout, it’s often the smallest refinements that create the biggest wins. That’s particularly poignant a truth when it comes to the most powerful commercial lever in a hospitality business – the menu. 

 

Frankly, the real commercial wins in most menus right now aren’t found in reinvention, but in precision. And with operators navigating the heaviest cost pressures in a generation, the businesses outperforming the market are treating menu engineering and commercialisation not as a back-of-house task, but as a board-level strategy. They understand that the menu is, at its heart, a commercial engine, within which sit systems and behaviours that shape commercial performance far more than whether a dish sounds delicious.  

 

Every dish is a commercial decision: contribution margin, throughput, waste, labour intensity, perceived value, stretch, frequency and brand identity all meet at this single touchpoint. Get it right, and a menu can improve bottom line faster than almost any other lever available to a leadership team. We’ve seen many real-life examples of success with an analytical approach. For example, we know that a simple switch of a salad leaf led to cash gains of £87,000 per annum in a large multi-site brand.

 

By simply switching out fresh fruit garnish for a chocolate dusting, another major brand netted £16,000 while increasing visual appeal. Broadly speaking, re-engineering troublesome products that drive waste can release thousands in annualised margin simply by switching supplier. Even side dishes can contribute serious incremental sales when they’re craveable and an easy add-on.

 

These are real, bankable results from businesses that treat their menus as a precision machine rather than a static document. Yet in many businesses, menus evolve through habit rather than evidence. Favourites linger. Poor sellers occupy valuable real estate. Dishes are added to “solve” customer wants and drive reach without consideration for cost, complexity or alignment with the brand’s value architecture. 

 

Meanwhile, changing consumer behaviour, especially around frequency and value sensitivity, exposes the weaknesses of menus built on instinct or legacy. Quickly and quietly, menus can become 20% bigger, 30% more complicated and materially less profitable – a patchwork quilt effect – usually the result of trying to maximise choice and reach and avoid the industry group dining “handbrake”.

 

Before you know it, you have a six-page bifold on your hands and consumers are losing confidence in the brands ability to deliver. Engineering simplicity is the key here, with sustained optimisation the beating heart. That’s where the real margin hides, and there are many operators already excelling here.

 

My mind goes to Wagamama, which has always understood the relationship between having a dynamic menu and the disciplined operational simplicity required to deliver it. The dishes look fluid and energetic, but underneath sits a kitchen system that runs with extraordinary consistency and high levels of waste management.

 

And while one menu project might give you a burst of speed, the real advantage comes from making precise adjustments every menu cycle, so each improvement compounds on the one before it. Very much the Formula 1 pit stop mindset.

 

A 0.5% gross profit improvement doesn’t look dramatic on a spreadsheet, but applied across multiple sites and thousands of weekly covers, it turns into six-figure wins. A 2% uplift in sales through better menu design or psychology creates similar impact. Reducing stock keeping unit count by 5% or removing a labour bottleneck can achieve even more. 

 

The magic is in the compounding: small, cross-functional efficiencies layered across the menu ecosystem create performance gains that feel outsized compared with the effort required to unlock them. Sounds simple, right? 

 

With consumers eating out less often, but being more discerning when they do, menu engineering becomes the connective tissue between delivering a great night out and keeping the numbers stacked, while also protecting teams.

 

And with the Budget having landed with an almighty thud, operators can’t afford to wait and see. We couldn’t control the Budget. We also can’t control inflation, consumer confidence, interest rate jitters or whether the next six months will feel like a cautious crawl or a cautious climb. 

 

But you can control the commercial engine sitting at the heart of your business. In unpredictable times, engineering becomes a competitive advantage. And if a sports car deserves expert tuning, then so does your menu.