Inflation is a persistent challenge for businesses across the UK, but its impact is particularly pronounced in the hospitality sector. With service inflation driving up costs, restaurants, hotels, and food service providers are facing increased pressures on pricing, wages, and supply chain management. Here’s a closer look at how UK inflation is shaping the hospitality landscape in 2025.
Service Inflation vs. General Inflation
Unlike general inflation, which affects the overall cost of goods and services, service inflation specifically impacts sectors like hospitality, where labour and operational costs make up a significant portion of expenses. With wages rising and supply chain disruptions continuing, service-based industries are seeing higher-than-average inflation rates.
Key Cost Drivers for Hospitality Businesses
Labour Costs – The rise in the National Living Wage and National Insurance contributions means higher payroll expenses for hospitality employers.
Food Inflation – With commodity prices fluctuating, restaurants must navigate rising costs on essentials like dairy, meat, and produce.
Energy and Utility Costs – The hospitality industry is energy-intensive, and rising fuel prices add another layer of financial pressure.
Supplier and Wholesaler Costs – With main UK wholesalers increasing costs to serve by around 1.29%-1.5%, and some regional wholesalers up to 3%, businesses must absorb or pass on these expenses.
Navigating the Challenges
Menu Adjustments – Restaurants can rethink their ingredient sourcing, introducing cost-effective alternatives without compromising on quality.
Operational Efficiencies – Reducing waste, optimising energy use, and streamlining staff scheduling can help manage rising costs.
Pricing Strategies – Finding the balance between maintaining profit margins and keeping menu prices attractive to consumers is crucial.
The Road Ahead
Despite these challenges, the hospitality industry has proven its resilience time and again. By staying agile, leveraging technology, and embracing creative solutions, businesses can navigate the evolving economic landscape while continuing to deliver exceptional experiences to their customers.
As inflation remains a key topic in 2025, hospitality businesses that adapt proactively will be best positioned to thrive in the face of economic uncertainty.
How The Full Range Can Help
At The Full Range, we know that rising costs and inflation pressures can be tough on hospitality businesses. That’s why we work to help you manage supplier relationships, secure the best pricing, and find cost-effective alternatives without compromising on quality.
Each review we receive from suppliers is benchmarked and as a business we push back at every opportunity where we believe any specific product has fallen out of sync. On commodity lines available via multiple suppliers we advise on the most cost effective route to market following each review period.
With our expert procurement support and industry insights, we help you navigate fluctuating food prices and increasing supplier charges—so you can focus on delivering great experiences while keeping your business profitable. Get in touch today to find out how we can help.
