If you run a pub, cafe, restaurant or hotel, you’ve probably noticed things are getting a bit tighter. Not just in customer spending, but in your own outgoings too. And it’s not your imagination. The cost of doing business in hospitality is rising fast.

There’s a proper squeeze happening right now for hospitality businesses across the UK. Three major cost increases all kicked in this April, a triple whammy. We all know the government loves nothing more than to create more financial pressure for business owners.

Hospitality costs on the rise: What’s increasing in 2025?

Let’s start with National Insurance. From the 6th April, the rate employers pay has jumped from 13.8% to 15%. That might look and sound small on paper, but once it’s applied across your whole team, it takes quite a significant bite out of your wage budget.

And it gets worse. The threshold for when you start paying National Insurance has dropped. It used to be just over £9,000. Now it kicks in once someone earns more than £5,000. That means you’re paying more, and on more of your employees’ pay.

There is a hint of silver lining. The Employment Allowance has increased from £5,000 to £10,500. So, if your business doesn’t employ loads of people, that might help take the edge off. But if you’ve got a full team or multiple sites, it’s not going to stretch very far.

Next up, business rates. Surprise, surprise – those have increased too.

And then we’ve got the rise in minimum wage. Most hospitality businesses rely on roles at or near minimum wage. And when that rate goes up, you can’t leave the next pay band behind. So wages rise all around. Fair enough, but expensive.

Put all of that together and you’ve got a serious cost increase across the board – the triple whammy that’s affecting profitability for pubs, restaurants and cafés across the UK.

How hospitality businesses can respond to rising costs

Now is not the time to bury your head in the sand. Sitting back and hoping it all evens out is not a plan. You’ve got to take action and get your books working for you.

A few weeks ago I spoke to one of my pub clients. Nice fella. He’d noticed that lunchtime trade had dropped off, but wages were still being paid. He was losing money in the middle of the day and didn’t know where to start.

First thing I told him – get his books in order. You’ve got to be able to see what’s making you money and what isn’t. If you don’t know which items are profitable, or whether takeaway is doing better than sitting in, you’re flying blind.

Then we talked about the menu. He wasn’t offering anything for the lunch crowd – no soup, no light bites, nothing quick. I suggested something simple and cost-effective. Soup, pâté, sandwiches. Something you can prep ahead and serve fast. Something that brings people in for a quick bite and a pint.

It’s the same idea as the plat du jour in France. A couple of set dishes at a decent price. No waste, quick turnaround, and easy for the kitchen to manage.

He’s now testing a lunch deal: soup, sandwich, and a drink. Sit in or takeaway. It’s already helping bring people through the door during those quieter hours.

7 practical ways to improve profitability in hospitality:

This isn’t just about menus. Here’s what every hospitality business owner should be reviewing right now:

1. Sort your reporting – Get your bookkeeping cleaned up and look at the reports. What’s selling, what’s not, and what’s actually profitable? 
2. Match your rotas to demand – Don’t pay for staff to stand around. Plan your shifts based on when people actually come in. 
3. Cut food and drink waste – If it’s going in the bin, it’s money out the door. Keep an eye on what’s being thrown away and why. 
4. Review your suppliers – Prices vary widely. There’s no need to overpay for the same ingredients or drinks. Look around and renegotiate. 
5. Try new services – Early breakfasts, takeaway lunches, set menus, or delivery options. Or even consider partitioning some of your tables as ‘co-working space’ during the day. Even a few extra covers each day can make a difference. 
6. Consider a price increase – You can’t absorb every cost. Your loyal customers will understand a small price rise if you’re still offering good value and not ripping them off. If my go-to chinese restaurant put a 5% increase on my favourite dish, I’d accept it without question. Anything 10% and over might start to raise an eyebrow. 
7. Market your quiet times – Monday nights empty? Offer something. Two-for-one mains, free drink with a meal, fixed priced menu. You need to make the quiet times work harder. 

And whatever you do, don’t forget to get the word out. Marketing makes a real difference, make sure you’re letting people know about menu changes, lunch deals and happy hour. Whether that’s social media marketing, using a chalkboard out front or posting in local groups. You don’t need a big campaign, just make sure people know what you’re offering.

Why doing nothing isn’t an option 

Let’s be honest, hospitality business costs across the UK are not going back down any time soon. National Insurance, minimum wage, business rates – it’s all gone up, and it’s not likely to reverse. If you carry on without making changes, your profit will get squeezed until there’s nothing left.

So what’s the answer? Take a long hard look at your books. Cut waste where you can. Try new ideas. Adjust your pricing if you need to. Make every part of your business work harder.

And if you’re not sure where to start – that’s where I come in. I’ll help you figure out what’s eating into your margin and what changes you can make to keep more money in your pocket.

Give me a ring, drop me an email, or come and have a face-to-face chat over a brew.

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