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Hospitality business leaders react to staffing crisis

Published:  17 August, 2022

Unemployment levels are at a record low, while the total number of job vacancies in May-June 2022 was 1.3million, this is according to figures released today by the Office for National Statistics (ONS).

The hospitality sector accounts for 174,000 of those vacancies, and industry leaders have been weighing in on how best to solve the crisis.

Kate Nicholls CEO of UKHospitality said: “Staff shortages have been at a record high in the hospitality industry for some time, causing thousands of operators to cut trading hours or close for whole days, at a cost of £21bn in lost revenue.

“At the same time, operating costs are soaring across the board for businesses already carrying heavy debt levels from the pandemic. The industry needs urgent support from the Government if it is to survive and generate jobs and growth. In short, the recovery of both the sector and the UK economy is being threatened by the workforce crisis.”

Despite salaries increasing, inflation means that in ‘real terms’, average pay was down by -3% between April and June.

Chieu Cao, CEO of Mintago, said: “Inflation is soaring even higher and we have all come to accept that matters will get worse before they get better. Worryingly, with Mintago’s recent research revealing that over two-thirds (68%) of respondents haven’t received a pay rise in line with inflation, the situation is becoming desperate for many employees. 

“Something needs to change. UK employers must accept some responsibility in helping their teams to regain financial stability – even if they cannot afford meaningful pay rises.”

Meanwhile, rising costs have hampered margins and menu prices as hospitality's supply issues continue.

According to CGA’s Business Confidence Survey, more than two in three hospitality businesses (71%) have seen significant increases in energy costs, while six in 10 (60%) have experienced significant food and drink price inflation. 

With costs of labour and other inputs also squeezing margins, the on-trade is being forced to pass on some rises to consumers. Leaders say they have raised menu prices by an average of 9% in the last year, and they plan to raise them by a further 6% in the next 12 months.

Karl Chessell, CGA’s business unit director - hospitality operators and food, EMEA, said: “The double whammy of cost and availability issues is piling huge pressure on operators’ margins. Combined with the growing cost-of-living crisis for consumers, it means trading conditions will be very tough over the remainder of 2022.

“Hospitality’s long-term future is bright, but for now leaders will have to find the right balance between absorbing soaring costs and passing them on to guests. The huge supply challenges also highlight the need for urgent and sustained government support for the sector.”