Tackling the labour crisis in the hospitality industry

The labour crisis is one of the biggest issues currently facing the Hospitality industry in the UK. Staffing issues pre-date both Brexit and the Covid 19 pandemic, but these two factors have caused record levels of vacancies that businesses are having to combat. Brexit has led to businesses having to re-think their staff demographic, with the government encouraging a move towards a high wage, high skilled workforce, and away from immigration as a source of employees. The pandemic has also caused many people to move away from the industry, seeking more stability and a better work environment than has traditionally been found in Hospitality with its long hours, high stress levels, and low pay.  

The Current State of the Labour Crisis:

The Office for National Statistics (ONS) found that Hospitality businesses are more than twice as likely to struggle to fill vacancies compared to other industries at the moment, with 30% reporting difficulties filling vacancies vs. 13% across other industries. The industry has also seen a 59% increase in vacancies since Q1 2021; there are now an estimated 134,000 vacancies across Hospitality. Not only has this labour shortage worsened during the year, but surveys conducted with industry experts have shown that the crisis is expected to continue into 2022, meaning businesses need to plan ahead to understand how to lessen its impact. 

Fourth and CGA’s Business Confidence Survey for Q3 2021 found that 96% of participants (primarily comprising of CEOs, MDs, Chairmen, and other Senior Management within the Hospitality industry) anticipated shortages across both BOH and FOH roles into 2022. The survey also showed that just one in six felt confident in staff recruitment and retention, representing a drop of over 50% from Q2 this year. Fourth and CGA highlighted the staffing issue, alongside the supply chain crisis, as the main struggles the industry is facing as we head towards the end of 2021. 

What does this mean for the Hospitality industry? One of the main ways businesses have been tackling staff shortages is by improving their incentives for both current and prospective staff; CGA and Fourth found that 76% of respondents were offering better pay, with 56% also offering better development opportunities and benefits. Many big names in the industry have already begun implementing these kinds of changes, with Pret A Manger and Costa both offering 5% pay rises to their staff. Itsu are increasing pay by 11% for all entry-level employees and Prezzo are not only giving an average of a 4% pay rise but also closing on Boxing Day and offering improved development opportunities. These changes will help the industry fill record level vacancies but will also contribute to increased business costs that are already rising. 

What can the industry do:

Technology: 

48% of those responding to the Lightspeed 2021 Global State of Hospitality Report said that technology able to support or replace some staff functions would help them get back on their feet, and 94% of those involved in CGA and Fourth’s Business Confidence survey found that technology had been useful since re-opening this year. 4C can help identify your business needs and the best, most cost-effective options to suit your requirements. 

Supply Chain Processes & Operations: 

A robust procurement function could also save time on administrative tasks through actions such as consolidating the number of orders placed in a week, therefore reducing time required across the end-to-end supply chain. Now is the time to consider how to make your supply chain more efficient, be that through moving prep into the supply chain or implementing new methods such as dark kitchens. Stronger processes and additional technology can also provide support in the event of employee shortages or churn, as these remain in place throughout these changes. Reviewing a company’s operating costs or working on optimising their supply chain could also help mitigate the impact of labour shortages and higher costs across the business as well as streamlining existing operational processes. At 4C we can help map and review your end-to-end supply chain process and help implement changes to support your people and customers. 

Investing in Employee Development: 

Companies are being encouraged to invest in their employees’ development to aid retention; growing talent from within has been identified as a way forward during the labour shortage in the industry, and career development has proven to be an important incentive for prospective employees as well as current staff. If you are looking for new training packages or partnerships, at 4C we can help you find suitable options and secure the best price for what you’re looking for.  

Pricing: 

CGA and Fourth found that three in four business plan to pass on price increases to their customers.  We recommend that businesses use this opportunity to review pricing and margin to ensure competitiveness within the industry, and help you benchmark against your competitors and implement new pricing to help protect against the impact of high business costs. 

Please contact Gavin Bowen-Ashwin, Head of Hospitality Practice at 4C Associates at gavin.bowen-ashwin@4cassociates.com  if you would like to understand more about how we can help you to tackle the labour challenges in your organisation. 

To contact 4C Associates, book a meeting with us here.

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