The restaurant industry is going through some trying times. Recent industry figures suggest that 10 restaurants closed every day over the course of 12 months. This means that in one year, the total number of licensed premises in the UK fell by 3.6%, from 103,682 to 99,916.
In this post we will discuss some of the major issues and challenges currently facing the restaurant industry.
Hospitality Staff Shortages
For some years now, there has been talk of a staffing crisis in the UK hospitality industry. In early 2024, the industry has a staff shortfall of 107,000. This was an improvement over the peak of 176,000 the industry experienced post lockdown in 2022. But this figure was still high enough to make hospitality the third worst sector for staff shortfalls, after healthcare and retail.
Staff shortages impact service quality, which may compound issues for restaurants: If customers are not satisfied with their service, then they may be less likely to return to the restaurant. They may also leave a bad review, which could mean the restaurant will struggle to attract any new customers. Dissatisfied customers may even choose to dine and dash in protest.
What are restaurants doing to tackle staff shortages?
Some restaurants and bars have turned to tech to try and address the staffing crisis. Self-service terminals and QR menus, for example, can automate certain processes, meaning that the staff may feel less strained and better able to focus on delivering a good customer service. Other restaurants are addressing their recruitment and onboarding processes in order to better attract and retain staff.
Rising Restaurant Costs
The UK’s “cost of living crisis” has hit every sector. For restaurants, rising energy bills and the growing cost of food and drink has led to increased overheads, which many restaurants will struggle to afford.
Poor crops, supply chain issues and, most recently, import tariffs, have all resulted in food inflation. This will hit restaurants twice: Buying stock will become more expensive but, as their customers will also feel the pinch, they may experience fewer sales too. A combination of rising costs and falling sales can spell doom for any business in any industry.
What are restaurants doing to tackle rising costs?
To address these rising costs, some restaurants have chosen to tweak their menus. In some cases, this is simply a case of raising prices. But seasonal menus and a focus on local ingredients can help lower costs for both you and your customers, as it means your stock will be less vulnerable to crop issues and supply chain problems.
Technology and Cyber Threats
In recent years, technological advances have driven a rise in home delivery orders. In 2024, the UK food delivery market was valued at £3.8 billion, and was forecasted to rise by 15.2% over the following five years.
When ordering online, customers expect high quality food, delivered quickly. Many restaurants have restructured their business to meet these changing customer preferences and expectations. For some restaurants, this has meant shifting from traditional table service to a dedicated food delivery service, where processes that once conducted face-to-face are now conducted almost entirely online.
Embracing tech may have enabled restaurants to meet changing customer expectations, but at the same time, it may have made them more vulnerable to cybercrime. The more processes that are conducted online, the more possible vulnerabilities there are for cybercriminals to target.
What are restaurants doing to tackle cyber threats?
In response to this, restaurants should consider bespoke cybersecurity technologies to help keep their systems, and their customers, safe. Tailored cyber insurance can also help restaurants recover from the many costs they may incur as a result of a cyberattack.
We Can Help You Safeguard Your Restaurant Through These Trying Times
We know that times are tough for restaurants. This is why we are committed to protecting your business.
James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of A-rated insurance providers. We can help you get a specialist restaurant insurance package that truly meets your needs at a competitive price. Our restaurant insurance can include cyber cover, which will help you withstand the growing threat of cybercrime.
Get in touch for a free quote today.