It’s no joke: Hospitality industry to face half a billion in extra costs from April Fool’s Day!

Picture of Kate Nicholls, UK Hospitality Chief executive sitting on a panel at NRB24
  • Britain’s hospitality vendors face half a billion pounds in extra costs from 1 April.
  • In a double-whammy, customers have reached a “tipping point” on what they are prepared to pay to dine out or drink in a bar.

HOSPITALITY in the North of England fared better than its Southern cousins in remaining resilient last year but the industry is facing a “big hill to climb,” warned UK Hospitality chief executive Kate Nicholls.

A keynote speaker at The Northern Restaurant and Bar Show (NRB24), held at Manchester Central earlier this month, Nicholls said hospitality businesses across the country will close their doors on 31 March and reopen to face an extra £500 million worth of extra expenses that will come into effect from 1 April.

“The industry is about to climb more of a hill than a bump in the road,” Nicholls said.

“I don’t think we can just push the car up the hill with what we have got facing us in April. More businesses are going to close their doors at the end of March and reopen them without anything else changing in the economy.”

The £500 million worth of extra costs include an increase in the National Living Wage and Business Rates for anybody who has a larger premises. “That’s quite a significant challenge.”

In a double-whammy consumer’s have reached their limit as to how much they will pay to eat out or order a drink in a bar.

Research by CGA NielseIQ in partnership with NRB24 revealed that footfall and demand softened at the end of last year, citing that consumers wanted to go out more frequently, but were hampered by the cost of living and household finances in general.

“But this flipped for the first time in January 2024,” Nicholls said. “Consumers have reached a ‘tipping point’ as to how much they are prepared to pay when they dine out or buy a drink at the bar.”

Nichols welcomed the Government’s National Insurance Contribution (NIC) cuts, but they will take a little time to feed through. Inflation is also expected to further reduce and in response, a drop in the Bank of England interest rates.

“Our sunlit uplands are on the other side of the hill, but we’ve got to get over that hill,” she said.

Northern hospitality thriving

All the Northern England cities saw growth in sales in managed pubs, bars, and restaurants last year, with an average of 7.2% growth.

Newcastle (12.7%) and York (9.2%) lead the uptrend, followed by Sheffield (7.1%), Liverpool (6.8%), Chester (5.6%), Manchester (4.8%), and Leeds (4.4%).

There was a 2.5% decline in total country-wide venue numbers across the pub, bar, and restaurant sector in the year to October 2023.

But on average, there were 48 new openings per week in the same period. Over a quarter (26%) of new openings were in the North.

Business leaders remain optimistic over trading in the next 12 months. Confidence was stronger in the North, 59% of leaders compared to 51% in the South.

Notably, northern cities such as Liverpool (-0.8%), Newcastle (-1.2%), and Chester (-1.0%) have proven more resilient than London (-2.2%) and the national average, in terms of the number of outlets.

Consumer sentiment across the country also remains positive, with 4 in 5 stating that they are satisfied with the quality of the overall experience during recent visits to pubs, bars, and restaurants.

A higher percentage of customers in the North are ‘very satisfied’ with the quality of food, service, drinks, and overall experience, than the South. This is a contributing factor to the ongoing resilience in the North.

The research also found  experience-led concepts are positioned to thrive in the next 12 months.

Northern businesses like Mission Mars, Roxy Leisure and Graffiti Spirits Group are shaping a dynamic hospitality landscape in the north but also rapidly expanding to other regions. Their success underscores a broader trend within the industry, where immersive experiences are becoming key drivers of customer engagement and business expansion.

NRB24 event manager Siobhan Thompson said: “The results underscore the strength, resilience, and ambition of Northern hospitality establishments.

Despite shared challenges in the sector, operators in cities like Liverpool, Manchester, Sheffield, and Newcastle have demonstrated innovation and optimism in the face of issues such as rising utility prices, food inflation, and staffing concerns.

Whilst challenges persist, it’s heartening to witness the industry’s adaptability and positivity.”

More than 9,645 visitors attended the two-day show which had 300 suppliers exhibiting on 12-13 March.

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