Published 25 August 2021
Friend of CODE, Viewpoint, have published a report to provide insights for UK hospitality businesses after an uncertain 12 months. As well as setting out the trends for Q1 and Q2 of this financial year, the report forecasts trends for the next two quarters for the industry.
The report details how sales in the hospitality industry have fluctuated dramatically over the last 12 months in line with the various Covid-related restrictions and barriers the industry has faced, as well as the impact of government recovery schemes such as Eat Out to Help Out. The figures show the spike of sales in June, when indoor hospitality re-opened, far beyond 2018 and 2019’s figures. It also tracks a sharp decrease entering July, as the delay of restrictions easing dampened spirits and raised caution amongst guests.
Viewpoint’s analysis of gross profit over the last three years indicates there’s space for cautious optimism for Q3 and Q4, with Q2 reaching the same level of profitability as 2019 after a tremendous slump in 2020.
The data shows promise for the demand for hospitality returning, and sales returning to the level of turnover of pre-pandemic years, after a spike of sales when hospitality was initially able to open.
Profitability also looks optimistic and is expected to rise in Q3. The caution does lie, however, with the VAT increase to 12.5% in September. Will restaurants take the hit on profitability or increase their prices to accommodate this greater level of VAT?
Q3 data will be very interesting in terms of labour costs as the hospitality staffing crisis continues. Hospitality businesses have begun and will likely continue to increase wages to attract staff to their businesses.
The report also advises caution in the coming months as businesses may need to repay loans from last year, and also with business rates returning to 66% this month.
The report concludes: “This is a time of stress, reflection and for the most adaptable – innovation. The smartest businesses will not only survive but reshape the industry they embody.”
Friend of CODE, Viewpoint, provides accounting and consultancy services to London’s most exciting restaurants and bars. Find out more about Viewpoint here