Hospitality continues growth, but difficulties on the horizon

September saw 1.7% year-on-year sales growth for leading hospitality groups, but it won’t all be plain sailing for the rest of this year, according to the latest data from CGA RSM Hospitality Business Tracker.

The figure of 1.7% matches the UK inflation rate, and follows on from the 1.5% growth in July and 1.3% in August. CGA notes that total sales growth in September was 3.7%. Sales in London were weaker than those in the rest of the country, at 1.3% compared to 1.9%.

Bars also continued to struggle according to the data, with 3.8% drop in like-for-like sales, while managed pub sales went up by 1.5%. The big winner last month was restaurants, with like-for-like sales 3.2% higher.

Karl Chessell, director of hospitality operators and food for EMEA at CGA by NIQ suggested that the “dismal weather” last month “made real-terms growth for hospitality groups challenging”.

“Pubs faced a particularly difficult month, with the rain keeping people out of beer gardens and terraces—though it did at least drive some of them indoors to give restaurants a brighter time,” commented Chessell. “While some positive economic indicators raise confidence for a brighter final quarter of 2024, hospitality continues to battle substantial headwinds, and the forthcoming Budget is an opportunity to give the sector the targeted support it deserves.”

The upcoming Autumn Budget on 30 October, the first of the new Labour Government, is not the only thing that hospitality operators have to consider, according to RSM UK’s head of leisure and hospitality Saxon Moseley: “Another concern for operators is the recent flurry of staff-related legal and tax changes hitting the industry. With the new tipping legislation and the Employment Rights Bill already set to increase the cost burden of employing staff, a potential hike in National Insurance contributions alongside National Minimum Wage rate increases could push many businesses to the brink before the all-important festive trading season.”

The Employments Rights Bill will be a significant moment for the sector, with the end of zero hours contracts proving to be something of a double-edged sword for employers and employees alike.

The new tipping legislation is also predicted to prove costly for businesses, with a report on the policy claiming that a fifth of operators, equalling around 25,740 operators, will each see costs rise by anywhere from £60,000 to £360,000 per year as a result of the change.

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