A summary of the trends and challenges faced by business owners in 2024

Although the festive season of 2023 was robust, with hospitality businesses reporting a 6.1% increase in sales compared to the previous year, nearly 25% of these businesses entered 2024 without any cash reserves, and almost one-third had enough funds to sustain operations for less than three months. Consumers were also feeling financial strain, with nearly a quarter planning to cut back on their dining budgets for the year.

In spite of facing several challenges in 2024, there are signs of optimism emerging with many operators innovating and adapting to changing economic and consumer demands. As we turn the corner into 2025, we took some time to reflect on the past year to help every business see how far they have come, and how the sector is indeed proving to be a role model for resilience.

Weather and events impact sales

Wet weather in April caused a 1.7% drop in sales, the first year on year decrease in hospitality since September. However, in June, sales recovered and tracked 2.9% above the previous year.

As the summer of sport kicked off, drink sales soared. On the day of the Euros final, drink sales increased by 124% year on year.

Labour Challenges

Restaurants had fewer vacancies going into 2024, but more than half (53% ) were still looking for staff.

In the quarter to April 2024, there were 107,000 vacancies in the hospitality industry, 15% higher than pre-pandemic levels. However, in September 2024, the estimated number of vacancies decreased by 42,000 to 857,000.

The national minimum wage increase in April 2024 significantly contributed to the year’s growing labour costs. The minimum wage rose 9.8% to £11.44 per hour and for the first time, the change applied to workers aged 21 and over. Previously the threshold was 23yrs.

The earnings threshold for skilled worker visas was introduced, meaning oversees employees must now earn over £15.88 per hour to qualify, increasing labour costs for hospitality businesses and reducing the available talent pool.

Hospitality Sector Overview

Lumina Intelligence predicted a 2.8% growth in the hospitality sector in 2024, reaching a total value of £99.4bn, outpacing pre-pandemic totals by 8.2%.

For the first time in 5 years, it was expected that the number of food outlets will have grown to 321,826 – a 0.2% increase in 2024. An expansion in retail formats, including drive-thru and kiosk-style services was expected to drive this growth.

Service-led restaurants face a ‘challenging outlook’ due to their exposure to increased business rates, inflation and a reduction in consumer spending.

Looking ahead to 2025

Investment in new formats, digital transformation and new product development will drive the eating out market by £7bn from 2024-2027.