“Dropping as low as £30.65 (per labour hour)” when analysing the restaurant sector alone, Fourth said that “heavy” discounting accounts for the figures, with “many (hospitality) groups pursuing aggressive discounting policies in the UK over the past four-to-six weeks” and the Telegraph reporting a 20-30% rise over the past year.
Also revealing that wages as a percentage of sales have risen by 0.9% over the same period, the data claimed that “cost pressures from decreasing productivity have been exacerbated by continued, but steady, wage-cost inflation,” with the average hourly wage in the hospitality industry sitting at £8.28 - a rise of 2% since May 2017 – “which is 3% above the Government’s target of reaching £8.05 by April 2018.”
Mike Shipley, analytics and insight solutions director at Fourth, explained: “Our figures show that a domino effect of aggressive discounting in the hospitality industry, particularly the restaurant sector, has taken a heavy toll on productivity as brands compete for custom in a very competitive market place.
“Compounding the issue, the latest figures from the Coffer Peach Tracker, show that managed pubs, bars and restaurants like-for-like sales were down 0.9% in September. This trend is indicative of the wider hospitality industry, with significant cost headwinds taking their toll as operators battle to maintain and build sales.
“Discounting is a quick fix to this complex situation and with Brexit looming on the horizon, it’s imperative that operators scrutinize all aspects of their operation to understand where they can cut costs, such as smarter scheduling software and renegotiating procurement deals in line with the market.
“As with all adversity, there is a silver lining and, ultimately, the businesses who successfully navigate this period, streamline their business models and increase efficiency of labour and procurement, will be well placed for growth when the market reverts.”