13th July 2026Navigating the hospitality squeeze: practical steps to protect your business

From rising food and energy costs to increasing employment costs and a heavier tax burden, London’s restaurant and hospitality businesses continue to face an incredibly tough trading environment. These pressures are compounded by April’s rise in the National Living Wage alongside a growing number of regulatory changes affecting the sector.  

These issues were at the forefront of discussions at the recent UK Hospitality Summer Conference. The message was clear: businesses can no longer rely solely on raising prices to cover inflation. Instead, protecting your margins, maintaining strong cash flow and finding opportunities to generate revenue are becoming essential for survival. 

Based on our experience working with businesses across the sector, here are three key areas you should review right now.

Challenge your costs and track your prime metrics

When inflation remains high, understanding exactly where your money is being spent is critical. Rather than just cutting back blindly, look at restructuring your main outgoings and monitoring your ratios:  

• Review supplier arrangements: Long-standing relationships can sometimes mean you miss out on better deals. Check if your current suppliers still offer the best value for your current volumes. Joining forces with other independent operators to increase buying power or re-tendering contracts can unlock discounts you might have missed. 

• Talk to your landlord: Empty properties are bad news for landlords. Many are open to flexible setups, like short-term rent reductions or turnover-based rent, rather than losing a good tenant completely. 

• Manage staffing costs and prime metrics: With the minimum wage for 18-to-20-year-olds up by 8.5 per cent to £10.85 this year, staff costs are a major pressure. Rota software can help match your staff hours with historic footfall data, ensuring you are not overstaffed during quiet mid-afternoon windows.

Look at new ways to bring in revenue

Relying solely on standard table covers or bar sales leaves you vulnerable to quiet spells. Successful owners are using their existing setups to create new, profitable income streams, regardless of their size: 

• Turn your brand into products: Fallow in St James’s has successfully expanded beyond its restaurant operations, creating a media presence that complements its core offering. For a smaller neighbourhood bistro, you can adopt this exact mindset on a smaller scale and venture into merchandise, sauces, meal kits or digital content to help boost revenue and your brand. 

• Become a community hub: Pubs are increasingly using their space for different uses during quiet daytime hours. The Prince of Peckham is a great example, operating as a co-working space and cultural hub to attract daytime customers who would not normally visit a traditional pub. 

• Turn food waste into income: Platforms like ‘Too Good To Go’, ‘Karma’, and ‘Olio’ let you sell surplus stock instead of tossing it, reclaiming ingredient costs while reaching new audiences. These app purchases often double as viral marketing; “unboxing” videos of surplus bags can pull large numbers of views on TikTok and Instagram, giving independent operators free local exposure that drives football.

Make the most of government support

While the industry continues to lobby for long-term business rates reform, it is important to take advantage of any immediate support available. The main focus right now is the temporary Great British Summer Savings scheme, which cuts VAT from 20 per cent down to 5 per cent between 25 June and 1 September on children’s meals and family attractions. Read more on the Sumer group’s briefing. While this should help boost summer trade, it does require administration, which impact potential savings: 

• Register your business and offers via the official Great British Sumer Savings website.  

• Update your till systems: Your EPOS and accounting systems must be updated immediately to separate qualifying children’s meals (eaten on-site and ordered from a children’s menu) from your standard 20 per cent VAT items. Getting this wrong could lead to compliance errors on your next VAT return. 

• Decide on your pricing strategy: You need to decide whether to pass the full 15 per cent saving on to your customers to boost footfall or retain a portion of the relief within the business. For most independent operators currently struggling with wage hikes, retaining a part of this VAT reduction can provide a vital cash-flow buffer to help absorb your rising costs over the summer. 

The importance of acting early 

One common characteristic among successful hospitality businesses is that they take action before challenges become critical. Monitoring cash flow, reviewing performance metrics and seeking professional advice early can create significantly more options when trading conditions become difficult.  

The hospitality sector cannot keep absorbing endless cost increases. The businesses that thrive will be those that keep a tight grip on costs, monitor their weekly metrics, and find clever ways to diversify their revenue streams. 

Our team at HW Fisher is here to help you review your costs, improve cash flow, provide clients with up to date metrics, and maximise available tax reliefs so you can plan confidently for the future.