Harder to hire, even tougher to keep: hospitality’s retention crunch

The hospitality sector stands at a crossroads, with financial pressures mounting and workforce satisfaction waning. A new survey from Hospitality Jobs UK and KAM Insights, in partnership with the Access Group, paints a stark picture: nearly half (46%) of hospitality employees now earn under £30k, up from 37% in 2024 and 30% in 2023. Salaries have dipped across most areas except contract catering, and more employees are being pushed beyond their contracted hours.

“While this is disappointing, it’s not entirely unexpected,” says Anthony Tattersall, general manager of hospitality at Access Group. “The sector is under immense pressure, especially with impending changes to National Insurance contributions and the minimum wage.”

“Ultimately, cost-cutting is a difficult balancing act, as businesses need to maintain service quality while managing expenses.”

Unsurprisingly, this strain has led to growing discontent. Employee satisfaction has slipped, with fewer workers recommending hospitality as a career – 74% compared to 82% last year. Fewer employees also believe they have a good work-life balance. More are working significant overtime. Yet despite the pressures, most workers (60%) expect to stay with their current employer for the next year. Does this signal the industry’s resilience? Perhaps. Or is the uncertainty of the job market keeping workers from seeking new roles?

“Recruitment is already challenging due to skills shortages and a limited labour pool,” says Andy Whiteaker, head of employment at Boyes Turner, who works with hospitality clients. “The positive side is that businesses want their hires to stay, as recruitment costs – agency fees, downtime, training – are significant.”

Whiteaker also notes that despite financial pressures, many hospitality businesses are still struggling to fill vacancies. “Reducing headcount is not always a viable option when businesses are already short-staffed and in need of skilled workers. Instead, retention has become a priority – keeping staff engaged and reducing turnover helps avoid the high costs of recruitment and training. Some businesses are also investing in technology, such as booking and automation software, to improve efficiency and reduce long-term costs. While initial investment can be expensive, these solutions can lead to significant savings over time. Ultimately, cost-cutting is a difficult balancing act, as businesses need to maintain service quality while managing expenses.”

Dean Harper, chef and founder of Harper Fine Dining, shares a similar concern: “the hospitality sector’s staff retention crisis is unlikely to ease simply because businesses are cutting jobs. While fewer available roles might slow job-hopping in the short term, it doesn’t address the underlying issues that push workers to leave – low pay, long hours and unpredictable conditions. If anything, financial strain on businesses could make these problems worse, leading to further dissatisfaction and departures from the industry altogether.”

Harper adds: “Rising costs mean many hospitality businesses are caught between higher wage obligations and tighter margins. Some will try to offset this by reducing hours, limiting hiring, or turning to automation where possible. Others may introduce new benefits (retention bonuses, improved working conditions) to keep staff engaged.” However, Harper warns that worsening conditions could drive more employees to leave hospitality entirely if businesses can’t afford these changes implemented by the government. 

Many workers cite their colleagues and supportive management as the key reasons they stay. Yet financial instability and a lack of training are eroding morale.

Maxwell Harding, founder and chief executive of Dynamify, also highlights the role of technology in alleviating these fresh cost pressures. “To stay competitive, operators who will naturally be reluctant to invest further in hiring additional staff, will be considering digitising and streamlining their ordering systems with modern EPoS solutions,” he says. “Not only will these systems help reduce queues and facilitate straightforward online and in-app ordering, but will also ease pressure on smaller teams, helping improve staff retention by reducing burnout.” Harding supposes that technology’s ability to free up staff’s time from tedious tasks will allow them to add more value by engaging and assisting guests instead. 

Andy Whitehead, Chief Financial Officer of Eviivo, says the drive to automate hospitality is not about headcount reduction but unlocking human potential. “It’s important to move beyond the misconception that automation in hospitality is about cutting headcount. In reality, it’s about elevating roles that already exist. By automating repetitive tasks such as booking management and check-ins, teams are freed up to focus on high-value, guest-centric or owner-centric activities that require creativity, empathy and a human touch.”

Whitehead points to three key areas where automation is now commonly applied: guest communications, accounting and payments, and day-to-day operations. “Guest messaging is probably the most obvious AI innovation to have swept across the hospitality sector in recent years,” he explains. “From pre-arrival emails to post-stay feedback requests, almost all of the guest communication journey can now be automated.” In finance, automation tools are reducing the burden on teams by supporting automated invoicing, multi-currency payments and reconciliation. Operationally, automation is streamlining everything from housekeeping rotas to analytics reporting, creating time for teams to focus on more strategic tasks.

“Ultimately, the purpose of automation is to unlock the full potential of humans’ role in hospitality,” Whitehead adds. “When the repetitive work is handled efficiently in the background, teams are free to focus on delivering the kind of thoughtful, attentive service that makes guests return.”

Mark Williams, managing director of EMEA at WorkJam, agrees that technology adoption is not just an operational necessity but a strategic imperative in navigating staff turnover. “If the hospitality industry fails to invest in automation, such as flexible shift scheduling systems and earned wage access solutions, it will struggle to weather, or even survive, these challenging times,” he warns. Williams stresses that embracing technical innovation can significantly improve employee engagement and motivation – key factors in reducing churn. “Although rising costs are never a positive for businesses, those that embrace these changes as an opportunity to enhance productivity and invest in their employees will be the winners in the long run.”

But with rising operational costs, it’s easy to see why Tattersall says it’s understandable that employee satisfaction may not be the top priority for many operators. That said, he notes, “a happy and well-trained workforce is undeniably more productive and more likely to stay, reducing costly staff turnover”.

At the heart of retention issues lies a paradox. The industry thrives on camaraderie and strong team dynamics. Many workers cite their colleagues and supportive management as the key reasons they stay. Yet financial instability and a lack of training are eroding morale. More than a third (35%) of respondents say they receive some training but not enough to feel confident in their roles.

“Training and development are crucial – not just role-specific training, but broader skill-building opportunities that enhance employees’ career prospects,” Whiteaker adds. “One of the most effective strategies is simply listening to employees. Businesses should be mindful of offering benefits and incentives that align with employee needs. While brainstorming new initiatives is valuable, ensuring they resonate with employees is essential.”

Post-Brexit immigration policies have also complicated recruitment efforts. Whiteaker explains, “The increased minimum salary threshold for skilled worker visas (around £36k) has made it challenging to hire foreign workers for many roles. However, for younger workers (under 26), the salary threshold is slightly lower (around £30k), which some businesses are using as a workaround.” He adds that there is ongoing political discussion about introducing an EU mobility visa, which would allow EU workers to come to the UK for short-term employment, similar to Australia’s working holiday visa. “While this is not yet in place, it could be a potential solution in the coming years to help ease labour shortages in the industry.”

Meanwhile, technology is proving to be both a challenge and a solution. AI, once seen as a disruptive force, is now being embraced by a growing portion of hospitality workers. According to Photoroom, 15% of hospitality employees use AI daily, and nearly a fifth (18%) believe it will enhance operational performance. The survey also found that 41% of employees view AI as a helpful tool, while 49% say technology improves job satisfaction.

The Chancellor’s measures that kicked in at the start of this April have set the tone for hospitality’s future strategies.

“AI, when used responsibly, is a powerful tool that can unlock new potential. It’s not about replacing human creativity but enhancing it – helping businesses create authentic, engaging content without the need for expensive resources,” says Matthieu Rouif, chief executive and co-founder of Photoroom. “By automating tasks like content creation and marketing, AI allows professionals in the food sector – whether in delivery or dining – to focus on what they do best: cooking.”

AI’s influence extends beyond the workforce. Consumer preferences are shifting, with 28% saying brand visuals sway their purchasing decisions. Yet, 50% distrust brands that misuse AI. The use of AI in marketing is becoming a dividing line: 21% of consumers choose chain restaurants because of their polished imagery, while 64% still prefer to support local independent eateries. The challenge for small hospitality businesses? 30% want to grow but lack the resources for effective marketing.

The Chancellor’s measures that kicked in at the start of this April have set the tone for hospitality’s future strategies. Steve Perez, founder and CEO of Global Brands, warns, “The increases to the national minimum wage and employers’ national insurance contributions, combined with reductions to business rates relief, will have disastrous consequences for businesses.”

Perez continues: “As an employer, I’m proud that the lowest rates of pay in my businesses are set above the minimum wage threshold, but it goes without saying this will have a huge impact, especially in service sectors like hospitality.”

As the hospitality sector grapples with rising costs, shifting regulations, and a dwindling talent pool, businesses are forced to make tough choices. Wage hikes and tax burdens may be unavoidable, but how businesses respond will shape the industry’s future. Some will invest in technology to drive efficiency, others will double down on employee retention, and many will have to rethink their entire operational models.

Yet, at its core, hospitality is about people – both the employees who keep the industry running and the customers they serve. If businesses focus solely on cost-cutting without addressing the deeper issues of staff well-being and career development, the talent exodus will continue. The industry’s survival hinges on its ability to strike a balance: leveraging innovation while preserving the human touch that makes hospitality unique. The question now is whether businesses can adapt quickly enough to ensure that balance is sustainable in the years ahead.