On the latest 5THWAVE podcast, Will Hawkley, Global Head of Leisure & Hospitality KPMG, explained that methods adopted by hospitality businesses during the pandemic could prevent the industry from burdening the end consumer with inflation-induced price rises
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Three quarters of businesses in the UK are mitigating skyrocketing energy costs by reducing their gas and electricity usage | Photo credit: Josh Appel
The pressures of inflation are being powered by a perfect storm of existing supply chain issues and labour shortages, compounded by recent increases in fuel prices as a result of the Russian invasion of Ukraine.
For the hospitality sector, the result is cost escalation across the board, with the cost of running an outlet becoming noticeably more expensive and distribution costs climbing.
Recent research from UKHospitality found that 76% of businesses in the UK are mitigating skyrocketing energy costs by reducing their gas and electricity usage and raising prices, while 38% have cut their trading hours.
The success of global economies coming out of the Covid-19 pandemic undoubtedly risks regression due to soaring inflation.
However, according to Will Hawkley, Global Head of Leisure & Hospitality KPMG, the upshot of rising costs may not impact on the end user as drastically as some in the industry have feared.
Although KPMG research of 3,000 consumers found that eating out is the first target of cost-cutting for 65% of respondents, speaking on the 5THWAVE podcast, Hawkley said that he believes the resilience and innovation of the hospitality industry, furthered during the Covid-19 pandemic, could alleviate the pressures.
Citing the speed and growth of delivery operations in the early months of lockdown restrictions, Hawkley commented that the success and subsequent data gathering that connecting directly with consumers in their homes has had could become of increasing value to businesses as they mitigate the current cluster of pressures.
First launched in September 2020 to counter Covid-19 disruption to its office worker customer base, Pret A Manger’s subscription service is evidence of this and is currently used more than one million times per week in the UK.
Likewise, boutique bakery and coffee chain Gail’s saw turnover fall in 2020 because of Covid-19 trading restrictions but reported that pre-tax profits rose at the end of 2021 after the successful roll-out of click & collect and delivery.
Listen to episode 39 of the 5THWAVE podcast to hear more on navigating the realities of soaring inflation.