How the Hospitality Sector is Evolving with the Consumers

Posted on 31 March, 2016 by Editor in Chief

Walking down a British high street a decade ago offered something entirely different to our shopping streets today.

How the Hospitality Sector is Evolving with the Consumers

Traditional pubs may not have been opened throughout the day and especially not in the mornings. However, a lot of pubs have stepped up to the mark over the decade, to evolve with how consumers utilise them today.

The vast majority of pub goers nowadays are using them for eating out and socialising, rather than just for a few drinks. In fact, more than half of all pub visits involve food and only a quarter of the drinks consumed are alcoholic.

Furthermore, the biggest sellers of coffee are pubs, when competing against some of the biggest mainstream coffee chains, such as Starbucks, Cafe Nero and Costa Coffee. With many pubs acquiring extended licences, they can now open from early morning and offer breakfasts to their customers who would otherwise have gone to a cafe in the past. Having your early morning coffee & food in a pub has now become a normal day to day thing.

With other parts of the hospitality sector still progressing, it has been supported by government incentives to invest in the high street. This has led the number of restaurants to rise significantly, for instance.

However, there has also been a number of negative points that have come out of this. For example, due to higher completion, commercial property prices across the sector have risen. High street businesses feel that they are easy targets when it comes to business rates, with rates and rents now accounting for more than a fifth of turnover.

The recent budget gave little benefit to the sector as business rates reforms and Corporation tax cuts do not come into emission until 2020. The introduction of stakeholder pensions and apprenticeships levies will see significant year on year increases in operating costs for pubs and restaurants.

While business rates ensure a fair contribution, internet sellers are not subject to the same business rates as those in more traditional businesses, which many people are feeling not so fair. A lot of firms want to see a rebalancing of rates as an overall business tax instead of property tax so this spreads the weight more proportionately.

Currently, pubs and restaurants account for 5% of gross domestic product, but pay more than 10% of all business rates in the country. This means the average pub pays 15p a pint in business rates whilst a supermarket pays just 5p per pint. On-line firms only pay nominal costs due to warehouse values being far lower than prime high street property, thus making the system immensely unfair and unsustainable.

A promise had been made by the Chancellor to allow local councils to set and retain 100% of business rates but local authorities view pubs via an old-fashioned prism, giving higher priority to tech and science businesses rather than taking care of hospitality firms.

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