Managing Rising Labour Costs: 5 Tips for Hospitality Businesses
With the minimum wage increasing to £11.44 per hour from April 2024, many UK hospitality businesses are feeling the pressure. Labour costs already make up a significant portion of expenses in this industry, and now employers are tasked with balancing this wage hike with the need to retain and support staff in a sector with one of the highest turnover rates. This blog covers practical ways to keep labour costs manageable while maintaining a strong, motivated team.
1. Conduct Regular Workforce Audits
When wages increase, every role counts. A workforce audit helps you identify which roles are essential and which might be streamlined or combined to optimise productivity without sacrificing quality. Understanding peak times and staffing needs also allows you to plan shifts more effectively.
Tip: Use scheduling software like Deputy or Rotaready to track peak times, monitor productivity, and adjust staffing accordingly. Studies from UKHospitality show that optimising workforce schedules can reduce labour costs by up to 10%, while still delivering quality service.
2. Prioritise Retention to Reduce Recruitment Costs
Turnover is high in hospitality, and recruitment can be costly—both in time and money. Retaining employees, particularly seasoned team members, reduces these costs and keeps morale high, as experienced staff contribute more efficiently and support new hires.
Tip: Invest in training and development programmes. Platforms like Springboard UK offer affordable industry-specific courses that help retain staff by promoting skill growth and career advancement. According to CIPD, businesses that focus on development have 25% lower turnover rates, which significantly helps offset rising labour costs.
3. Embrace Technology for Operational Efficiency
Automation can lighten the load on staff, allowing you to maintain high service standards with a leaner team. From automating reservations to using digital inventory systems, technology can help you streamline operations and reduce the time spent on manual tasks.
Tip: Look into tech solutions that reduce manual labour, such as ResDiary for bookings or MarketMan for inventory management. The Hospitality Technology Hub reports that venues using automated systems see up to 20% reductions in daily operational costs, helping to balance wage increases without compromising service.
4. Implement Flexible Staffing Models
With fluctuating demand, particularly in tourism-driven areas, flexible staffing models like split shifts, on-call scheduling, or part-time roles can help meet service needs without overstaffing during quieter periods. Flexibility also appeals to many workers, which supports retention.
Tip: Create a pool of on-call staff or casual workers for peak times. Apps like GigPro or Indeed Flex connect businesses with temporary staff, offering a flexible way to meet demand without committing to full-time wages. A recent Caterer.com survey showed that 40% of hospitality workers value flexible hours, making it a great retention strategy as well.
5. Focus on Employee Well-being and Work-Life Balance
Investing in employee well-being pays off in the long term. Workers who feel valued and supported are more likely to stay, which reduces recruitment needs and improves team dynamics. Offering benefits like mental health support, flexible shifts, or social activities can go a long way in maintaining morale, especially during high-pressure times.
Tip: Consider partnering with well-being programmes like Hospitality Action or providing access to resources like Headspace for Work. According to Mental Health Foundation, workplaces that promote mental health have up to 35% better retention rates. Happy employees are productive, reducing the need for extra staff to compensate for burnout.
Navigating the Wage Rise with Strategic Planning
The April 2024 minimum wage increase presents challenges, but also opportunities to strengthen your team and streamline operations. By focusing on staff retention, leveraging technology, and adopting flexible staffing models, you can balance rising costs without compromising service. For more insights on adapting to wage changes and managing labour costs, follow Talking Hospitality as we continue exploring strategies to support the industry through every new challenge.
Implementing these tips can help you adapt to wage increases with resilience, creating a work environment that supports both your team and your bottom line.
