For pubs and restaurants hoping to save money and stay afloat in the face of a record squeeze on disposable incomes, there is now a new normal: younger staff, simpler menus, less meat and closing for lunch.
Since the onset of the pandemic the sector has been hit by skyrocketing energy costs, food inflation, high interest rates, a recruitment crisis and consumer uncertainty.
The latest insolvency data shows the impact of those pressures: restaurants closed at their highest rate in a decade in the first three months of this year, according to figures from the accountancy firm Price Bailey.
The latest data from Barclaycard payments shows nearly a fifth of owners and managers of hospitality businesses have considered permanently closing due to the impact of last-minute cancellations and no-shows.
So how are restaurant and bar owners adjusting?
Menu changes
Vivek Singh owns the Cinnamon Club, an Indian fine dining restaurant in the heart of Westminster that is popular with political types, along with three other mid-priced eateries dotted around central London.
To save money, Singh took the unusual step of removing one of the most popular dishes from the menu. Butter chicken is a rich, unctuous dish and a favourite with customers, but it contains tomatoes, which have steeply risen in price and are subject to shortages that have been blamed on bad weather in southern Europe and north Africa.
The dish was nixed for a jungle curry chicken that did not contain tomatoes, which has been “immensely popular” with customers, says Singh. As a small business manager, Singh can adapt quickly to changes in price and availability of ingredients.
“As prices increased it became vital to manage costs and one way we have done this as a small business is to speak to suppliers,” he says.
“What is becoming available? And more importantly what will be in short supply? It was not our first resort to put prices up for customers, but instead adapt to the circumstances.”
Jack Stein, the chef director at Rick Stein Restaurants, and the son of its founder, says economic pressure has altered customer behaviour, as more people share starters, skip dessert and cut down on expensive cocktails.
“In response we explored lower-priced drinking options on our wine list and a £17.50 set menu that changes every few months and prioritises locally sourced, seasonal produce,” he says.
“We have four meetings a month about the menu and its attractiveness to customers to try to future proof our profits. This is vital as we are struggling with fixed costs going up like the rest of the industry.”
Pascal Aussignac, the chef patron of the Michelin-starred Club Gascon, says higher-end restaurants such as his have turned to tasting menus and abandoned a-la-carte offerings to reduce costs and waste, and to mitigate kitchen staff shortages.
At neighbourhood eatery Colleen’s in Ramsbottom, Greater Manchester, Thomas Morgan, 29, and his wife, Ellen, previously just offered an a-la-carte menu, but now offer a three-course set menu for £18, with one choice for each course.
He says the new menu allows people to enjoy a few hours in a neighbourhood eatery, at a cheaper price point for the customer and restaurant: “We tested it for six weeks to put the feelers out as we were concerned the lack of choice would put people off. But people have been really receptive and we have gained new customers through the initiative.”
Less meat
A combination of changing consumer tastes and the skyrocketing costs of meat, dairy and eggs, has caused restaurants to embrace vegetarian and vegan dishes.
Stein says: “Things like chickpeas or legumes are not as volatile in price, drive a high margin and also contribute towards sustainability … we used to have one vegetarian and one vegan dish but now it’s three or four.”
Singh features more vegetarian and vegan dishes on his menus and says it is “the future” as “diners want more choice and alternatives”.
Aussignac adds that diners have “evolved” and now has a vegetarian tasting menu at Club Gascon that utilises vegetables and edible flowers from its private garden.
Closing for lunch
Hospitality businesses have faced well-publicised staffing problems that have been blamed on Brexit and the pandemic, prompting business owners embrace flexible working and shorter opening times.
Singh says: “Businesses are slowly realising that what might have been good pre-pandemic is not good now … working four nights a week is not for everyone…we need to embrace flexibility around people’s lives.”
Club Gascon no longer opens for lunch and has reduced the opening times for evening service by half an hour, closing to customers at 9.30pm instead of 10pm.
Staff now start at midday and work until around 11pm for five days a week. This is about 50 to 55 hours a week compared with pre-pandemic levels that would be about 70.
Aussignac adds: “For the first time ever I will be closing Club Gascon for two weeks in mid-August so the whole staff can take a summer holiday, as we are unable find staff to cover when people are away.”
Younger staff
Roisin Stimpson, the co-founder of Speakeasy Entertainment which has bars including Nightjar, Oriole and Swift, says an increase in young, inexperienced staff applying has seen the business commit more funds and time into training.
“Immediately [after] the pandemic we really struggled with staffing. Initially those staff who we’d managed to keep asked for a raise as we reopened our businesses; most of them had been living at 60% of their income for the best part of 18 months because furlough did not account for income derived from service charges.
“Furlough was kept in place until 21 September 2022so it was at that point that the labour market began to shift around. We saw a noticeable decrease in European candidates – the effect of Brexit bringing itself to bear. Later we had an uptick in keen but inexperienced staff, a trend which continues today.
“This meant we had to invest time and money in training from the ground up. Since spring this year the labour market seems to have stabilised, however a rise of more than 10% in staff wages since 2021 eats into profits.”
Promotions
With fixed costs such as rent and business rates, some restaurants have opted to attract customers during normally quiet times of day.
Singh has introduced a Kolkata-inspired afternoon tea or brunch to boost footfall.
“I would have never previously even thought to do an afternoon tea, but it has brought in a different sort of customer than we would normally get to the restaurant, he says.”
Others are offering free children’s meals. Charlie Deuchar, who owns Bayards Cove Inn, a luxury seven-bedroom hotel in Dartmouth that serves food all day, started the new promotion last week to make it “affordable” for families but to also help drive early evening trade for the business.
Stimpson says: “Our main focus at the moment is marketing. There is a noticeable decrease in customers out and about, and late night trade.
“Furthermore people aren’t drinking as much. We’ve responded with packages of drinks and food, as well as flights of cocktails such as our current Sip and Savour menu to encourage people to stay out and make a night of it.”
The co-founders of Speakeasy Entertainment says they have used more third-party media companies to reach new customers and are working with influencers on TikTok for the first time.
