The current cost of living challenges are presenting additional obstacles to hospitality businesses that were once thriving.
The Restaurant Association is receiving growing feedback from businesses about decreased patronage, which, combined with the escalating costs of goods and labour, is significantly affecting the industry.
As a sector heavily reliant on discretionary spending, hospitality is often among the first to feel the impact when people tighten their budgets. A recent member survey highlights this as the single biggest challenge facing businesses in this industry. An astonishing 35% of respondents pointed to “managing the customer downturn” as the predominant issue, echoing the profound impact of the cost of living on the industry.
“We are becoming increasingly aware of the many businesses currently struggling to stay afloat. Many are still burdened with debt accrued during the pandemic, which amplifies the challenges they face,” said Restaurant Association CEO Marisa Bidois.
The survey also shed light on various other challenges faced by businesses in the sector. 20% mentioned “managing labour costs” as a significant concern, while 11% cited “managing food costs” as a pressing issue. Additionally, 10% expressed worries about “staff shortages,” and 8% grappled with “fixed operating costs.”
Business confidence has witnessed a notable decline, with 43% of respondents expressing the belief that business conditions for their companies will remain unchanged over the next 12 months. Meanwhile, 30% hold the view that conditions will worsen during the same period. In contrast, only 27% of respondents maintain an optimistic outlook, anticipating improvements in the coming year.
“In the spirit of resilience and innovation, many businesses are actively adapting to overcome the prevailing challenges. These adaptations include crafting enticing specials and creating unique dining events to attract and retain customers,” continued Bidois.
“At the Association, we maintain a cautious optimism for the upcoming Christmas and Summer trading season, as domestic and international tourism are expected to regain momentum. However, the challenges our industry faces are immediate, and many businesses are currently navigating turbulent waters.
“We know that times are tough for consumers at the moment but we do encourage people to support their favourite establishments however they are able. This support isn’t just about a meal or a night out; it’s about contributing to the very survival of these businesses and preserving their place in our communities.”