Experts predict what 2023 holds for hospitality

06 January 2023 by

The new year brings new hope but also new challenges, exacerbated by 2022's cost of living hangover. The experts share their predictions

At the dawn of 2022 many had hoped that the struggles of Covid-19 would finally relent and allow the industry a period of recovery driven by consumers' pent-up desire to socialise. While that desire to get out, eat well and see new places did transpire, along with it came all manner of challenges, from staffing to escalating food and energy costs and the looming shadow of recession.

As we enter 2023 the outlook is considerably bleaker for many than it was 12 months ago. The normally buoyant festive season has been blighted by strikes and the financial outlook is concerning, to say the least. With levels of disposable income decreasing for many consumers and businesses facing a multitude of pressures, analysts are warning that the industry may look considerably different in a year's time, and even those that do prosper will need to be savvy.

Polar express

Peter Martin, analyst and founder of Peach 20/20, said: "I think we're going to see an increasingly polarised market in hospitality and there will be a big difference between those groups with the financial headroom to withstand the next year versus the independent businesses, of which I think we are likely to see casualties."

For Martin a key concern is that the trading environment will prove too perilous for new entrants and "this will stifle the next generation of entrepreneurs". He does see some light on the horizon, though: "It's hats off to the likes of Kerb, Boxpark, Sessions in Brighton and the Altringham Market in the north west – they're still nurturing these entrepreneurs. It's also going to be about what landlords do to encourage new businesses, because we need this for the longer-term good of the industry. While it's going to be tough for everybody, let's not stifle this business talent. We need those entrepreneurs coming through, but there needs to be encouragement and support."

Invest in investors

It's not just food markets that are offering reduced-risk market entry. Jules Pearson, global vice-president of food and beverage development at Ennismore, said: "Covid has left many independents struggling and there's now a realisation that running an independent restaurant or bar can be so fragile, especially with the state of the economy and political environment. As a result, we'll see more independents signing up to work with investors and hospitality groups globally.

"We've seen Studio Frantzén just open in Harrods, you have Tom Sellers going into the 1 Hotel in Mayfair, Kris Yenbamroong from LA's Night+Market working on Chet's in Shepherd's Bush, Noma working with the Ace in Kyoto. It's a safer business model for many and allows them to travel the world too. It's nothing new, of course, and it's the business I am in, but post-Covid we've seen more people willing to have the conversations and more businesses reaching out to us rather than vice versa."

The people versus

The staffing crisis has filled many inches of The Caterer in the past 12 months and our analysts predict this will continue into 2023.

Martin said: "Clearly people will remain a big issue, and there's no silver bullet to solve it. Recruitment is one thing, but the key is retention. Businesses really need to understand terms and conditions and put perks into contracts. And it will be interesting to learn from what other people are doing in the industry – such as PizzaExpress offering food for family and friends, because a few pizzas aren't expensive compared to the cost of hiring someone new. Retention is going to be vital this year. We need to hang on to the people we've got because recruiting is so expensive."

Employee retention is now more important than ever

Dan Rose-Bristow, chairman of the Master Innholders and owner of the Torridon hotel, predicts that automation will be increasingly adopted to help businesses manage with a smaller workforce. He added: "Artificial intelligence and IT continues to introduce more automation into hospitality and those in the supply chain to try and overcome the lack of staff and willingness to work in the industry. Small changes such as self check-out, QR codes, room service, self-ordering and paying at the table are all ways hospitality is evolving. As an industry we will need to think way beyond our own sector and look into those sectors already championing new ways of working to counteract the supply chain and people issues.

"Employee retention is now more important than ever in the search for that edge in the employment market. Healthcare benefits, mental health programmes, discounts on hotel facilities and new learning opportunities are key ways to aid retention. Hotels will need to ensure they are focused on the training and development of their teams and will look to outside support to continue to do this."

Hunger games

Food costs have already seen double-digit increases since the beginning of 2022. David Read, chairman of Prestige Purchasing, said: "This year will see the welcome relief of falling inflation, but sadly this will just be an indication that prices are rising more slowly. It will be a major shock if the total cost of food at the kitchen door actually falls before at least the middle of 2024, if at all.

"Prior to this year we had a long period of low inflation in hospitality – the 2021 average was 2.6%, but the average in 2022 will likely be around 13%. Our comparative prediction for 2023 is 10.5%.

"Many of the key indicators that drive inflation have been running in the wrong direction for some time, even before the Ukraine war, which of course has greatly exacerbated food supply challenges. These indicators include currency, labour costs, energy and fuels costs, and shortages of product. In turn these have driven up food commodity prices at an unprecedented rate.

"The impact of the outbreak of war in Ukraine was almost immediate upon food prices, but any positive impacts of the war ending will likely emerge much more slowly. We are seeing some softening of commodity markets as other countries switch into production of commodities in short supply, such as oils, but the core commodities of dairy, eggs, beef, pork and fish each have unique challenges and are likely to continue to firm during the year ahead in spite of rising interest rates."

With energy costs also a major concern, particularly with no details on the delivery of support beyond Q1, there is also an expectation that further price increases will need to be passed on to consumers.

Pearson added: "There will be a rise in prices to account for the rising food costs and inflation – but I also think this is overdue as wages need to go up to attract more people to the industry and reflect the hours, time and effort that goes into restaurants."

What trends can we expect to see in 2023?

Fresh, healthy and vegan

Jules Pearson, global vice-president of food and beverage development, Ennismore: "We'll see more vegetable-focused menus as restaurants try to be more sustainable. Vegan junk food and lab-grown meat will still have their place, but people now want vegan food made from real vegetables, not junk food."

Eater-tainment

Pearson: "Eater-tainment venues will grow as people look for a more immersive dining environment, providing escapism from politics and the everyday doom and gloom. Oche [darts] and Flippers [roller skating] are two recent openings and Swingers [crazy golf] just raised millions to expand globally. That trend is only going to grow, especially among Gen Z, who are avid gamers and seek out new experiences."

Carbon-labelling

Shane Kavanagh, commercial director, Benugo: "Despite the economic climate, I think carbon counting will continue to grow in the industry next year, and it's a happy coincidence that low carbon is often lower cost – take locally grown fruit and veg, which has less environmental impact than heavily processed meat with its complex supply chain. We never want to judge people on their choices, but we can nudge them in the right direction. For example, if two products are similarly priced and equally delicious, but one is higher carbon, perhaps they'll choose the one with a lower impact on the planet."

Strong overseas demand

Stuart Procter, chief operating officer, Stafford Collection: "Here at the Stafford we anticipate a stronger 2023 from overseas visitors, especially from the US, on the back of a record 2022 and with the dollar to the pound being so enticing. And there is the coronation and the other usual fabulous events, such as Chelsea Flower Show and Wimbledon."

Rooms for growth

Max Winder, resident manager, Farlam Hall, Cumbria: "The expectation is that 2022 will repeat itself in terms of occupancy, so lower than a ‘normal' year, mostly due to the energy crisis and Brits flooding abroad. However, we expect and are seeing an increased number of overseas travellers again. The American market in particular is looking healthier, which we expect to show with bookings in the new year for spring/summer trips. We are already seeing a good increase in web traffic from the US, which we put down to a good rate of exchange and the coronation in May. We already have more on the books for 2023 than we did this time last year for 2022."

Continue reading

You need to be a premium member to view this. Subscribe from just 99p per week.

Already subscribed?

TagsTrends
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

close

Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking