Year in review: trends and predictions for the hospitality sector

The UK hospitality sector continues to be an exciting industry to operate in. Up against a range of headwinds, not least the challenges of sustained political and economic uncertainty, the sector continues to prove its durability. In our Hospitality Index, we asked owners and operators of restaurants, pubs and bars across the UK about the trends and challenges they have faced over the past twelve months. This year, the findings acknowledge these challenges but also illustrate a positive and resilient sector ready to tackle them head-on and adapt for the year ahead. As an industry traditionally reliant upon migrant labour, Brexit has without a doubt been a cause of ongoing concern for hospitality businesses. The Index showed that 83% anticipate that Brexit will have a negative impact on their ability to recruit staff – a rise from 77% last year. With a number of well-known chains faltering under pressure, clarification over the UK’s future relationship with the EU is needed in the hope of some respite. The concern over increases in business rates continues to be highlighted by the Index, with the majority of respondents calling for reform of the system. Indeed, a Treasury committee recently declared the business rates system as ‘broken’, with many political parties promising a review into the current system ahead of the upcoming general election. Despite this, the outlook may not be as gloomy for operators as the headlines suggest. In fact, 90% of those we surveyed have a positive outlook for the future of their own business, indicating that the sector remains resilient, and is reacting well to change. With consumer habits constantly shifting, this year’s trends show that hospitality businesses are adapting to meet the demands of their customers – whether this is through the food and drink they offer on their menus, or the use of payment and delivery platforms. This year, our research has shown that the growth in demand for healthier options continues apace and dietary requirements are now more than just afterthoughts on most food menus. 88% of respondents to this year’s Hospitality Index offer gluten-free options, whilst 56% offer dairy-free and 81% cater for a vegan diet. These figures are in some part down to operators offering increasing flexibility with menu items, for example allowing customers to choose between milk alternatives or giving the option to request a gluten-free bun for their burger. Tied with this is the greater range being offered on menus, far removed from the token vegetarian option we might have seen a few years ago. Accommodating dietary requirements or personal preferences is not just applicable to food menus however – we are also seeing a similar trend reflected in the drinks that are on offer. In this year’s Index 68% of respondents reported that they have seen an increased demand for non- or low-alcohol options, indicating that this trend is far from just a fad. With non- or low-alcohol beer now almost mainstream, non-alcohol spirits and wines are also becoming increasingly available: 43% of operators reported that they offer non-alcohol spirits, an increase from 20% in 2018; 20% offer non or low alcohol wine, up from 10%. Looking ahead, it is likely we will see these figures continue to rise, as businesses adapt to consumer demand. Somewhat linked to the drive for healthier lifestyle choices, is the pressure on businesses to respond to environmental concerns. Issues around sustainability have risen to the forefront of public awareness and the hospitality sector has taken note: 81% of operators surveyed say that they have improved the sustainability of their operations. Steps taken include becoming more energy efficient and using renewable energy sources; reducing single use plastic with recyclable or reusable alternatives; sourcing food more locally and using a local workforce to reduce transportation emissions; as well as putting in measures to limit food waste, including use of apps that direct leftover food to those who need it, rather than being sent to landfill. Obviously, such measures will have a positive impact on the environment, however there are ancillary benefits which can also positively impact business performance. Waste and Resources Action Programme (WRAP)’s prominent campaign ‘Stand up for Food’ highlighted that effective management of food waste can save businesses thousands of pounds each year. Furthermore, the Index showed that nearly 75% of hospitality businesses believe that being sustainable can boost their brand, and thus their public profile. Beyond calls for sustainability and dietary requirements, one consumer trend that hospitality businesses have had to adapt to over recent years has been the increase in demand for home delivery. Ever since the likes of Deliveroo and Uber Eats first appeared, the restaurant delivery market has significantly changed – and the number of hospitality businesses involved continues to rise. In our survey this year, 52% of respondents told us that they use a delivery partner, rising from 39% in 2018. But despite the boom in demand for restaurant delivery, the overall feedback from respondents suggests this is not a profitable venture, partly due to high commission rates. In fact, 72% of operators involved in the survey noted that delivery services have a negative or neutral impact upon their business profits and 74% view delivery as a necessity or a negative influence on business, rather than an opportunity for development. With the general election imminent and the next Brexit deadline early in the new year, what most operators would like to see is some stability. Until then, it is reassuring to see the sector continue to innovate and adapt in the face of political and economic uncertainty and constantly evolving consumer behaviour. By Gareth Ogden, partner at Haysmacintyre accountancy firm