Operating cost hikes prompt licensees to revisit diversification, price rises and potential sale of business


Catherine Livingstone

By Catherine Livingstone

With the price of food, fuel, energy, and rent continuing to increase as inflation is forecast to rise to 11%, many licensees are currently seeking to strike the right balance between raising prices without risking a decline in footfall.

Indeed, with operating costs continuing to rise so steeply, many licensees who had already increased their prices in spring, are now having to consider increasing them further still.

An added challenge for many city centre operators is the fact that trade has not returned to its pre-pandemic levels because, although city centres are busier than they have been for several years, many offices have adopted a hybrid working system where employees are encouraged to work from home part of the week, with many bars and restaurants seeing the knock-on effect of that.

It is no surprise that a number of city centre restaurants have yet to return to their pre-pandemic opening hours throughout the working week, with many opting instead to close for a day or two at the start of the week to save on staff and operating costs.

To cope with these significant challenges, many are revisiting the plans for diversification they put into play to cope with the pandemic restrictions, such as restarting home delivery services to bring in alternative revenue streams.

The never-ending difficulties faced by city centre-based restaurateurs has meant that some are considering bigger changes to their businesses such as relocation to the suburbs due to a loss of weekday trade as a result of hybrid working. Others, having endured a torrid several years, are turning their thoughts towards a potential sale.

After all, no sooner did the Covid restrictions start to ease than inflation soared and with the dawning realisation that trade is unlikely to bounce back quickly to pre-Covid levels, I anticipate that we will see a rise in deal activity in the hospitality sector over the second half of this year.

If a sale is an option actively under consideration, careful thought should be given to how to go about getting the business ready for sale as well as the potential tax implications of any potential sale.

We can assist throughout the sales process, from dealing with tax advice to arranging corporate finance. For further info, call me on 0141 566 7000.
Catherine Livingstone is a partner and head of the business advisory services team at Wylie & Bisset.

Wylie & Bisset LLP
Glasgow: 0141 566 7000 | Oban: 01631 562 478