Nothing quite beats the hospitality experience in a restaurant or pub, whether it’s casual drinks with friends and colleagues, or a meal with the family. However, if the demand for more hospitality businesses continues to rise, why aren’t more being set up?
Beyond its entertainment value, Jeremy Clarkson’s television series, Clarkson’s Farm, has highlighted the challenges associated with launching and running a hospitality business. His own attempt to open The Farmer’s Dog restaurant, showcased some of the daily pitfalls faced by the hospitality and leisure sector, such as planning permission and staffing shortages – common issues faced by businesses across the industry.
In this article, we explore the key challenges faced by restaurants and pubs, many of which were brought to life during the show:
1. Financial planning
The costs of establishing a new hospitality business can rise quickly. Careful budgeting is required in relation to renovations, legal costs, licensing, staffing, and purchasing equipment. With cash flow often stretched in the early stages of a new business, disciplined financial planning and management is crucial for long-term success.
Tax planning is also a key consideration. For example, capital allowance reliefs on renovations can significantly minimise your corporation tax liabilities. Staying on top of PAYE, VAT, and corporation tax deadlines avoids penalties and helps maintain healthy cash reserves.
2. Supply chain resilience and sourcing
Supply chains are vulnerable to disruption, whether you’re sourcing local ingredients or speciality products. Supplier delays, seasonal availability of products, and price fluctuations can all affect the planning of menus and profitability.
The recent rise in costs, driven by inflation and the cost-of-living crisis has squeezed margins further, forcing restaurants to adapt their menus, and sourcing and pricing strategies to remain competitive without comprising quality.
3. Public perception and brand positioning
A powerful and memorable launch is important for any new hospitality business. Public awareness and sentiment, shaped by marketing, social media, and reviews can play a key role in a business’s early success. Even the most carefully curated menu will struggle if public awareness and opinion is low.
Jeremy Clarkson’s celebrity status drew immediate attention, but most hospitality businesses must build visibility and trust to succeed. Restaurants, especially, need a clear identity, consistent messaging, and a positive presence to consistently attract and retain customers.
4. Building local support
Community engagement can play a vital role in supporting a new venue and its overall success, especially if it is situated in a rural area. In his TV series, Clarkson’s disagreements with local residents over noise and traffic illustrate the potential challenges facing new hospitality businesses.
Open communication, being responsive to the local community’s concerns and demonstrating value to the local area can help generate goodwill and avoid costly disputes.
5. Staffing and workforce retention
Staffing remains one of the biggest challenges in the hospitality and leisure sector. A reduced talent pool, brought on by Brexit, the pandemic, and shifting workforce expectations, have increased competition for skilled workers, while increases in the national minimum wage and employer National Insurance Contributions (NICs) have increased costs for employers.
Reducing staff turnover requires more than competitive pay. Investment in training, career progression, and incentives, such as employee share schemes, can help build loyalty and reduce recruitment cycles.
6. Complexities of planning permissions and licensing laws
Securing the necessary planning permissions and licencing laws can be a significant obstacle for new and expanding hospitality businesses. Even when a site looks viable on paper, it can quickly become mired in red tape due to change-of-use applications, alcohol licensing, and entertainment permits, to name a few examples.
These processes can be slow, costly, and influenced by local objections or environmental restrictions, particularly in rural areas, like Clarkson’s Chipping Norton farm, where regulatory scrutiny is often higher.
7. Infrastructure and Location Challenges
The location of a restaurant or pub will present a different set of challenges. For example, for those hospitality businesses situated in rural areas will often face challenges with transport links, parking, and supply chain logistics. Whereas urban venues will face higher rents, space constraints, and increased competition.
Site planning should also consider internal factors, such as kitchen configuration, customer flow, and staff facilities, and the availability of customer parking. Overlooking these practical elements can result in operational inefficiencies that impact service and profitability.
Final thoughts
While Clarkson’s journey into hospitality came with the added complexity of celebrity attention, the challenges he faced are familiar to hospitality businesses across the UK. From managing finances and compliance to building strong community ties, the path to success in the sector is rarely straightforward.
At Menzies, we work closely with hospitality and leisure businesses to address these issues head-on. Our sector-focused advice helps new ventures launch with confidence and established operators strengthen their foundations for growth.
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