The UK hospitality industry faces a shifting economic landscape in 2025, with significant changes driven by the Autumn Budget and ongoing food inflation trends. Adjustments to the National Living Wage, National Insurance, and key financial policies will impact operational costs, while fluctuations in food prices will challenge menu planning and procurement strategies. Here’s what hospitality businesses should expect and how they can navigate these changes effectively.
National Living Wage and National Insurance Changes
National Living Wage Increase
Hospitality employers will see increased payroll costs as the National Living Wage rises, affecting pricing and operational expenses.
National Insurance Adjustments
Rate Increase for Employers: Rising from 13.8% to 15% in April 2025, adding to the tax burden.
Threshold Reduction: Dropping from £9.1k to £5k, meaning more employees will be subject to NI contributions, increasing business costs.
Food Inflation and Supply Chain Pressures
The cost of food continues to fluctuate, requiring hospitality businesses to stay ahead of trends to manage costs effectively. Insights from the Institute of Grocery Distribution indicate persistent food inflation, with the UK Consumer Food Price Index projected to rise between 2.4% and 4.9%.
Product-Specific Price Movements
Milk Prices: Expected to decrease, offering some relief for dairy-heavy menus.
Beef Prices: Supply is down approximately 5%, leading to price spikes. Supermarket fresh beef prices have risen by around 43% since early 2025.
Cooking Oils: Rapeseed oil prices are up due to lower yields since October 2024, while olive oil prices are falling.
Seafood Costs: Demand for salmon, haddock, and cod is increasing, while quotas are being reduced (17% for haddock, 20% for cod), pushing prices higher.
Pork & Bacon: Strong production and better availability could help stabilise prices in both fresh and frozen categories.
Cocoa: Supply chain issues and reduced stock levels mean chocolate and cocoa-based products will see price hikes.
Chicken Prices: Increasing due to rising cases of avian flu globally.
Wholesaler and Supplier Cost Adjustments
Large wholesalers are implementing cost-to-serve increases of 1.29%-1.5% due to rising operational expenses. Hospitality businesses must prepare for higher procurement costs across the board.
Global Market Impacts: Tariffs
While this remains a moving feast, potential tariffs could impact the availability and cost of goods. If implemented, products may be redirected to other markets, affecting the supply chain dynamic for hospitality businesses.
How Hospitality Businesses Can Adapt
Menu Engineering & Strategic Planning
Adjusting recipes and sourcing alternative ingredients to balance costs.
Incorporating ingredients with stable or declining prices.
Supplier Negotiations
Locking in pricing agreements to mitigate unpredictable cost hikes.
Exploring alternative suppliers for better deals.
Operational Efficiency
Streamlining staff schedules and reducing waste to counteract higher expenses.
Optimising stock management to prevent over-ordering.
Customer Pricing Strategies
Implementing tiered pricing or menu changes to balance cost increases while remaining competitive.
Looking Ahead
While the 2025 Autumn Budget and ongoing food inflation present challenges, hospitality businesses that adopt a proactive approach can mitigate financial pressures. By staying informed, making strategic purchasing decisions, and optimising operations, the sector can continue to thrive despite inflationary trends. Preparing now will ensure long-term resilience in an ever-changing economic landscape.
How The Full Range Can Help
At The Full Range, we understand the challenges that rising costs and supply chain pressures bring to the hospitality industry. We work closely with businesses to secure the best pricing, optimise ingredient sourcing, and work strategically with suppliers to lock down prices, including securing future stock on specific commodities where availability challenges exist, such as chocolate. Our extensive supplier network and real-time market insights help you stay ahead of food costs, negotiate competitive contracts, and maintain profitability — ensuring your business thrives, even in a changing economic landscape.
