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Consumers were excited to return to normalcy after restrictions were eased in the UK in the spring of 2021. According to Office for National Statistics (ONS), consumer spending rose in May 20211 — signalling some positive signs for recovery. However, 2023 brought new challenges, such as the cost-of-living crisis, inflation, and the persisting talent shortages in hospitality.
In this blog, we explore:
In our recent Hospitality Workforce Report, our data revealed that trading figures for December 2022 were up 28%. This is due to consumers’ desire to return to their local pubs and restaurants since Omicron dulled Christmas festivities in 2021. This is further reinforced by Mitchells and Butler’s 13.3% boost in sales from its 1,600 venues in the UK2.
Furthermore, UKHospitality reported a 30-40% surge in sales for pubs and restaurants in November as British football fans rushed to watch the FIFA 2022 World Cup3. To a large degree, last December met trading expectations but was not quite a repeat of the levels seen in 2019. Nevertheless, sentiments remain that it could have performed better.
With that said, the disruption brought about by Covid-19 and the cost-of-living crisis that ensued have impacted most, if not all, businesses in hospitality and beyond. One prime example worth highlighting is retail, which also faced a myriad of somewhat similar challenges, pointing to a very familiar foe.
Based on data gathered using Fourth’s Advanced Analytics, Saturdays including New Year’s Eve, have proven to be the best-performing days for pubs and restaurants in December. The first two weekends of the month were very popular with trading tailing off around the beginning of the third weekend, resembling the sales pattern we saw in 2021. Overall sales figures were down 5.5% on the last weekend before Christmas — compared to data in 2019 — for example.
Moreover, the surge in sales on December 10, 2022, may have benefitted from the impact of England’s World Cup quarter-final against France4. In contrast, trading figures were up 11.6% on December 10, 2021, but marginally down -0.9% on the same day in 2019 — making December 3 the best-performing day, the first Saturday of the month.
However, it is also worth noting that rail strikes that took place in the run-up to Christmas had a negative impact on sales in hospitality5. Our data shows a 21% decrease in sales on December 13 compared to 2019 and a further 19% decrease the following day. Consumers’ shift in sentiments toward dining out may have been impacted by planned industrial actions, changing/cancelling many consumers’ travel plans.
Indeed, last year’s New Year’s Eve was a highlight for the trade. Figures were up 38.6% compared to figures on December 31, 2021, and 0.8% against data on New Year’s Eve in 2019. Restaurants, on the other hand, returned similar figures — 37.5% up in 2021 and 3.6% in 2019.
But as expected, more people worked in pubs and restaurants in 2022 than in 2021. An additional 5.2% more staff worked in the sector in December last year than 12 months prior, suggesting a more productive workforce. However, staff numbers remain much lower compared to staff count pre-Covid which may be due to persisting recruitment and talent retention challenges.
Hours worked have also increased at a much greater rate than headcount, suggesting publicans and restaurateurs are getting more work from staff. However, hours worked in 2022 are much lower across the board for pubs (-11%) and restaurants (-14%) compared to figures in 2019. This could be due to businesses employing more efficient strategies, but also as a direct result of some venues opting to reduce opening hours to help cope with pressures related to soaring energy costs and inflation.
With the new year in full swing, hospitality operators will face new challenges as macroeconomic factors continue to impact consumer sentiments toward spending.
Here are the key takeaways hospitality operators should consider moving forward:
With the much-awaited recent World Cup taking place in December last year, the hospitality sector received ‘unprecedented levels of interest’ as fans secured their bookings to watch the match abroad6. Likewise, many British football fans flocked to their local pubs to join in and cheer for England. Although many may prefer to attend sporting events in the summer, last year’s FIFA World Cup showed that it may not be too bad after all. This year brings many opportunities for the sector to bolster trade with upcoming events, such as the FIFA Women’s Cup, the men’s Rugby World Cup, the men’s ICC Cricket World Cup, and more.
After the government launched a public consultation earlier last month7, pubs will be able to stay open from 11:00 pm to 1:00 am beginning May 5 until May 7 in England and Wales. This means that pubs, bars, and clubs will be able to open for an extra 2 hours as the nation celebrates the ascension of a new King, according to UKHospitality.
The hospitality sector may continue to face unexpected tribulations. However, with Covid-19 becoming endemic, the sector may benefit from consumers’ desire to socialise and enjoy the hospitality that they are accustomed to. In our opinion, revenue may return and/or exceed pre-pandemic levels.
The Fourth Scheduling Solution has built-in forecasting that predicts future staffing needs. It matches available staff with the hours you need covered by allowing managers to base staffing decisions on variables, such as historical and recent sales trends, and demand factors such as the weather and local events. It gives managers the ability to adjust rotas to demand by engaging staff through a mobile app and by tracking employee work hours, lieu, and sick days in real-time. The user can see how many team members are needed in every area for each 15-minute period of the day. It’s easy to use and provides HR and payroll fully costed wage forecasting and a complete view of employee work patterns across multiple sites.
Last year’s data suggest the UK hospitality workforce worked longer hours during the festive period, increasing productivity. Again, this could be due to various factors such as a shortage of staff8 or the lack of funding to increase headcount. Finding and retaining quality talent as well as deploying effective hiring strategies will remain a key focus for many hospitality operators in 2023 and beyond.
Embracing technology is essential in tackling the labour shortage in hospitality. It does not only help you reach a wider pool of talent, but it can also streamline your application process and reduce costs. Fourth’s ATS provides a branded recruitment service that helps you build strong employer branding and attract quality talent. From posting vacancies using pre-templated job adverts across online job boards to applicant screening and arranging interviews to final hire and onboarding. Fourth’s ATS helps you streamline your hiring process and ensure a smooth journey from recruitment to a candidate’s first shift, immersing your staff in your company culture from day one.
Inflation and cost of living will have a definite impact on both consumers and businesses across all sectors. Hospitality trading hours may be reduced to control costs. Consumers may also choose to look for cheaper deals and bargains as they reduce their spending. It is all too difficult to predict for certain what actions consumers will take. However, with King Charles’ coronation to take place sometime this year and the extension of licensing hours, the UK hospitality sector may, once again, enjoy a boost in trade9.
Fourth offers a financial wellbeing solution in partnership with Wagestream. Wagestream’s software is easily integrated into an employer’s payroll system without changing their existing processes. Its app gives employees access to a toolkit of fairer, more inclusive financial products and services – from flexible pay to budgeting, vouchers, savings, financial coaching and more.
As AI revolutionises how we live, work, and relate to one another, technology will continue to be the driving force for streamlining and automating processes — empowering both employers and staff. Bolstered by over 20 years of rich data and insights, the Fourth Intelligence Platform can help you forecast demand and spot patterns more accurately and efficiently, helping you reduce costs and maximise margins. From analytics to workforce and inventory management, the Fourth Intelligence Platform is your end-to-end and AI-powered workforce management partner that helps you conquer with confidence whatever comes your way, every day.
In conclusion, this year presents many opportunities and challenges for the hospitality sector. Publicans and restaurateurs will have to develop strategies and utilise technologies that will allow them to operate with ease, remove inefficiencies, reduce costs, and maximise profit. 2023 may be a tough year, but with data-led business decisions, we hope that hospitality operators will be able to face the new year will both valour and renewed vigour.
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