Discounting taking ‘heavy toll’ on casual dining sector

GBK - Chichester

Discounting within the hospitality sector is coming at the expense of operational productivity, a global software partner for the industry has warned. 

Fourth, has revealed that productivity across the UK hospitality industry has fallen, with the key measure of ‘sales per labour hour sitting’ dropping 62p to £34.01 over the last six months, with the rate dropping as low as £30.65 when analysing the restaurant sector alone.

The software partner, which has provided data on the hourly pay of thousands of hospitality workers across the hotel, restaurant, QSR and pub sectors, also found that wages, as a percentage of sales, have risen 0.9% over the same period.

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The figures have been impacted by heavy discounting across the restaurant and casual dining sectors, with many groups pursuing aggressive discounting policies in the UK over the past four to six weeks.

Cost pressures from decreasing productivity have been exacerbated by continued, but steady, wage-cost inflation, with the average hourly wage in the hospitality industry now sitting at £8.28, a rise of 2% since May 2017 and is 3% above the Government’s target of reaching £8.05 by April 2018.

Mike Shipley, analytics and insight solutions director at Fourth, said: “Our figures show that a domino effect of aggressive discounting in the hospitality industry, particularly the restaurant sector, has taken a heavy toll on productivity as brands compete for custom in a very competitive market place.

“Discounting is a quick fix to this complex situation and with Brexit looming on the horizon, it’s imperative that operators scrutinise all aspects of their operation to understand where they can cut costs, such as smarter scheduling software and renegotiating procurement deals in line with the market.”

Meanwhile Fourth also analysed the pay gap between men and women within the sector. While the industry favoured women by 2p in December 2016 it has reverted to favouring men in May 2017 and now sits at 14p in favour of men.

This is driven by the male bias of workers in the kitchen and back-of-house roles, which are typically paid a higher hourly rate, versus a female bias in the front-of-house roles, where workers have the opportunity to top up their daily hourly rate through customer tips.

Shipley added: “Our demographic analysis shows that male non-British workers continue to make up the majority of back-of-house workers and chefs in the industry, and with continued pressure on skill shortages in this area since the Brexit vote, the hourly rate for men has started to increase, due to the continuing squeeze on supply.

“In context with this, female workers continue to make up the majority of front-of-house workers, where tips and gratuities form a key part of remuneration, and when taking this into consideration the overall rates of pay become more aligned.”

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