A record 64 percent of the largest restaurant companies in the United Kingdom are now realizing major revenue loss, and as a result, many expect to raise menu prices.
Several have suffered heavy losses due to major restructuring programs they initiated after the COVID-19 pandemic and as a result of debt repayments, accountancy firm UHY Hacker Young said, per The Guardian. The Bank of England is forecasting a recession lasting longer than a year and inflation rising above 13 percent, and more licensed hospitality businesses are expected to close in the second half of 2022, as cost pressures mount for business and consumers, according to the latest AlixPartners CGA Market Recovery Monitor.
“Sharp rises in food and energy prices, labor shortages, supply chain issues, and high consumer inflation are all likely to threaten many venues that have been left fragile by two years of COVID-related challenges,” AlixPartners CGA said.
“It may be a case of ‘out of the frying pan, into the fire’ for many U.K. restaurant groups. They expected, and needed, higher consumer spending as we put COVID further behind us, but this spending is now likely to fall when it is needed most,” UHY Hacker Young Partner Peter Kubik told The Guardian.
As a result of significantly increased expenses, restaurants are expected to raise menu prices by 6 percent this year, in addition to the 9 percent increase last year, according to Bloomberg.
More than two-thirds of hospitality businesses have seen significant increases in energy costs and 60 percent have realized higher prices on food and beverages, CGA and solutions company Fourth found in their Business Confidence Survey.
“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,” CGA by Nielsen IQ Head of Hospitality Operators Karl Chessell told Bloomberg. “The huge supply challenges also highlight the need for urgent and sustained government support for the sector.”
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