Revenues in the sector are predicted to grow this year by 26% compared with pre-pandemic level, equating to a £12bn rise in annual turnover over 2019, and a £22bn increase on 2021, according to Barclays Corporate Banking’s latest study UK Hospitality’s Next Challenge. However, the predicted growth could be stifled by soaring supplier costs and a scramble for talent, it says.
Barclays reports that 96% of restaurants are confident of growth this year but that 84% are struggling to recruit personnel, which could hamper growth. Vacancies for front of house staff (22%), and cleaning staff (20%) are causing the most issues, according to the report, with a shortage of cleaners most acute in the east Midlands and the east of England.
In response, restaurateurs are establishing new incentives to recruit and retain talent. The most popular measure, introduced by a third of restaurants, is to increase staff wages, according to Barclays.
“The restaurant industry was undoubtedly one of the hardest hit by prolonged periods of lockdown during the pandemic. In the early part of 2022 however, in a society free from restrictions, the sector enjoyed strong sales, leaving many confident about their growth prospects,” says Mike Saul, head of hospitality and leisure at Barclays Corporate Banking.
“The worsening cost-of-living crisis is now a serious threat to that growth, with the latest Barclaycard Consumer Spending Index showing that restaurants, bars, pubs and clubs have all seen a slight decline in May 2022, compared to the month before.
“Crucially for the industry, our research shows that talent shortages are also a major concern. It means there is now an added imperative for restaurateurs to find new and novel ways to recruit, reward and retain their staff.”
The report follows figures published in a joint survey by UKHospitality, the British Institute of Innkeeping and the British Beer and Pub Association that staff shortages in the hospitality industry are costing the industry £21bn in lost revenue. It found that a record shortage of workers has pushed nearly half (45%) of operators to cut trading hours or capacity in order to cope, with one in three businesses in the sector now having to close one or more days a week.
The Barclays report also shows that 41% of restaurants have started closing later to reflect new consumer behaviour post pandemic and that restaurants' utility bills have already risen by 37% year-on-year, on average.