Almost 50% of hospitality operators anticipate price rises as cost pressures bite

As operators face eye-watering increases to their overheads, almost 50% have said they will be forced to increase their prices by more than 10% in 2022.

A UKHospitality survey of more than 340 businesses – representing some 8,200 sites – found that 15% of operators anticipated price hikes of more than 20% to offset the cost pressures they face.

Businesses are reporting an average energy price increase of 41%, a labour cost increase of 19%, a 17% rise in food prices, 15% hike in drinks prices as well as 21% increase in insurance costs.

All this comes before VAT returns to 20% in April alongside a rise in business costs and National Minimum Wage.

UKHospitality chief executive, Kate Nicholls, said: “Omicron has infected the start of 2022 with lower-than-expected trading levels and higher than expected cancellations in hospitality venues. One in three businesses in our sector have no cash reserves left and are already carrying heavy debt burdens. Many of our community pubs, restaurants, hotels and hospitality venues will therefore fail as the cost-of-living crisis bites, causing demand to faulter. This can only cause the UK’s wider economic recovery to stutter.

“This April’s planned increases in VAT, employment costs and business rates are therefore likely to prove one financial burden too many for businesses who only then, as we come out of the quieter winter trading period, can hope to begin to start trading at full capacity once more.

“The industry wants to play its full part in the UK’s recovery from the pandemic but, as these latest figures highlight, we can only do that with further support from the Government - support that must include keeping VAT at 12.5% permanently.”