A recipe for resilience: What retail and hospitality businesses can do now to cut costs

The UK hospitality and retail sectors have borne the brunt of the nation’s economic slowdown, accounting for many thousands of job losses this year. Analysis by UKHospitality of Office for National Statistics data shows that around 89,000 roles have been cut across restaurants, pubs, bars and hotels alone since last October – that’s more than half of all job losses.

For these sectors, which are still recovering from the shock of the COVID-19 lockdowns, this wave of redundancies is particularly concerning. Industry leaders warn that rising operational costs, coupled with a series of tax increases, are now inflicting damage on the industry comparable to that caused by the pandemic.

In this article, we’ll explore the strategies retail and hospitality operators can adopt to manage costs and stay resilient in a challenging economic landscape.

The wider implications for business performance

For business owners, the impact goes far beyond immediate payroll costs. Reducing staff inevitably affects service quality, customer experience and long-term brand reputation. A shop, pub or restaurant running with minimal personnel may survive in the short term, but repeat business can decline, eroding revenue in ways that are difficult to measure.

The national impact of these challenges is becoming increasingly clear. For example, our research shows that more than one in 10 British pubs are technically insolvent and at imminent risk of collapse. These businesses will find it almost impossible to access extra funding unless the owners provide personal guarantees, which few are likely to do in the current climate.

Adding to the challenge is the uncertainty around government policy. Many operators are cautious about today’s tax and fiscal measures, which are creating a destabilising environment.

Yet, there is also an important nuance: most business leaders are willing to shoulder their share of short-term pain, through higher costs or tighter margins, provided that the ease of doing business is supported by tax and trade policy. What matters most to them is that the long-term rewards of taking capital risk in the UK remain competitive when compared with other jurisdictions.

Preparing for budget uncertainty

One of the biggest challenges for retail and hospitality businesses today is uncertainty around government budgets and fiscal policy. Changes to VAT, business rates or duty can be announced with little notice, leaving operators exposed if they have not built contingency plans.

The most resilient businesses prepare by:

• Stress-testing budgets against different tax or cost scenarios.
• Building cash reserves where possible to cushion sudden changes.
• Keeping a rolling 12-month forecast, updated monthly, to track performance and anticipate gaps.
• Reviewing covenants on loans, understanding what terms apply and what measures are needed to stay compliant.
• Staying aware of upcoming changes in UK accounting standards that may affect how assets, leases or liabilities are reported.
• Seeking early professional advice when new measures are announced so they can adapt quickly.

By planning for multiple scenarios, operators can reduce the shock of policy shifts and avoid being forced into reactive, short-term decisions.

Time to raise the bar on financial planning

The wave of job losses in UK hospitality and retail reflects a wider tension between external fiscal pressures and internal operational capacity. For business owners, the way forward lies in combining rigorous cost control, strategic investment in efficiency and engagement with expert financial advisors. Those who act decisively now have the potential not only to survive, but to emerge more resilient against current turbulence and future shocks.