The hospitality sector is facing a unique blend of challenges and opportunities in 2025. While some businesses are investing in refurbishments and expansion, others are grappling with rising costs, labour shortages, and a cautious candidate market.
Here’s what we’re seeing on the ground and what it means for employers in the sector.
Market Trends: Investment vs. Cost Pressures
Despite economic uncertainty, there is still some investment happening across the hospitality landscape, particularly in refurbishments and site expansions. However, these developments are overshadowed by increasing business rates, rising National Insurance contributions, and a significant hike in the minimum wage. The upcoming April increases are already prompting discussions on cost-cutting strategies, from reducing headcounts and restructuring roles to implementing more automation.
Redundancies & Recruitment Challenges
We’ve seen a wave of redundancies across hospitality, with major brands like Sainsbury’s cutting 3,000 jobs. One might expect this to result in a flood of available talent, but the reality is quite different. Those professionals currently in stable roles are reluctant to move, fearing the ongoing market instability. The hesitation to ‘jump ship’ has made talent acquisition increasingly difficult, and companies must work harder to position themselves as secure and attractive employers.
The Rise of Quick Service & Tech Solutions
A notable trend is the influx of Quick Service Restaurant (QSR) brands in the UK and from the US, with their focus on smaller premises, self-service ordering screens, and minimal staffing models. Larger restaurant groups are largely holding back on aggressive expansion, instead opting for efficiency-driven solutions.
With talent becoming more expensive and harder to source, many businesses are investing in technology - whether it’s self-service kiosks, automated food preparation systems, or other labour-saving innovations. While these tech-driven approaches can offset staffing challenges, they also require significant upfront investment and adaptation.
What Employers Need to Do
Given the cautious job market, it goes without saying that companies need to reassure potential candidates that they are stable and financially secure. This is particularly critical for attracting top talent, as market uncertainty often drives employees to stay put rather than risk moving to a new role.
We’re also hearing a wide range of strategies being considered by our clients to navigate rising costs, including:
Increasing menu prices
Reducing staff numbers or not replacing outgoing employees
Investing in automation and pre-prepared food to cut labour needs
Removing supervisory positions
Adjusting business hours to match demand
Linking pay more closely to restaurant turnover
Making contractual changes to allow for more flexible staffing
While redundancies remain a last resort, we are seeing job cuts at all levels, from entry roles to senior management positions.
The Hiring Landscape & Candidate Apathy
Recruiters and hiring managers continue to face challenges, including (sadly) no-shows, last-minute interview dropouts, and an overall lack of active job seekers. In such a competitive market, timely candidate feedback and a strong employer brand are more important than ever!
If companies want to attract top talent in 2025, they need to:
Present themselves as stable and reputable employers
Offer clear career progression prospects and job security
Improve hiring processes, including faster response times and structured feedback
Key Takeaways
Investment in refurbishments continues, but rising costs are squeezing margins.
Redundancies are on the rise, yet candidates are hesitant to move roles.
QSR brands are expanding, while larger restaurants focus on efficiency.
Labour shortages and high costs are driving automation.
Employers must work harder to reassure and attract talent.
With uncertainty still looming over the sector, those businesses that can strike the right balance between cost control and staff retention will be best positioned for success in 2025. If you’re looking for insights into hiring strategies or market trends, we’re here to help.
Let’s navigate these challenges together.
Comments