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15 October 2018
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‘QUICK-FIX DISCOUNTING’ IN THE HOSPITALITY SECTOR HITS PRODUCTIVITY

Web_waitress_iStock-480801590
Cost headwinds are taking a toll © iStock-

7 November 2017 | Herpreet Kaur Grewal


Productivity across the UK hospitality industry has fallen, with the key measure of sales per labour hour sitting at £34.01 – a 62p reduction since May 2017 – dropping as low as £30.65, when analysing the restaurant sector alone.

 

The headline number, mined from data by Fourth, a global software firm for the leisure and hospitality industries, reveals that the hourly pay of thousands of hospitality workers is blended across the hotel, restaurant, QSR and pub sectors. The analysis also shows that wages as a percentage of sales have risen 0.9 per cent over the same period.

 

The figures have been affected by heavy discounting across the restaurant and casual dining sectors, as many groups have pursued aggressive discounting policies in the UK over the past four to six weeks.

 

This is reflected by statistics published in The Telegraph reporting a rise of 20-30 per cent in discounting over the past year alone.

 

Furthermore, cost pressures from decreasing productivity have been exacerbated by continued but steady, wage-cost inflation – the average hourly wage in the hospitality industry now sits at £8.28, a rise of 2 per cent since May 2017, which is 3 per cent above the government’s target of reaching £8.05 by April 2018.

 

Mike Shipley, analytics and insight solutions director at Fourth, said: “Our figures show that a domino effect of aggressive discounting in the hospitality industry, particularly the restaurant sector, has taken a heavy toll on productivity as brands compete for custom in a very competitive market place.

 

“Compounding the issue, the latest figures from the Coffer Peach Tracker show that managed pubs, bars and restaurants like-for-like sales were down 0.9 per cent in September. This trend is indicative of the wider hospitality industry, with significant cost headwinds taking their toll as operators battle to maintain and build sales.

 

“Discounting is a quick fix to this complex situation and with Brexit looming on the horizon, it’s imperative that operators scrutinise all aspects of their operation to understand where they can cut costs, such as smarter scheduling software and renegotiating procurement deals in line with the market.

 

“As with all adversity, there is a silver lining and, ultimately, the businesses who successfully navigate this period, streamline their business models and increase efficiency of labour and procurement will be well placed for growth when the market reverts.”