Hospitality Industry Streamlines Offerings Amid Rising Costs

0

Rising costs in 2024 are reshaping the hospitality sector, prompting operators to streamline drink offerings and seek competitive supplier partnerships.

The Impact of Rising Costs on the Hospitality Sector

The hospitality industry is facing unprecedented challenges in 2024. Rising costs in wages, food, rent, and energy are straining operators. As a result, nearly 25% of hospitality businesses are changing their routes-to-market for drinks. This shift is primarily driven by the need to reduce delivery partners rather than increase them. Consequently, drinks brands are at risk of being de-listed from menus.

Operators are now compelled to review their entire cost base. This includes a thorough examination of their drinks offerings. According to recent research, 41% of hospitality leaders are rationalizing their supply base. Additionally, 26% are considering similar actions. The focus is on eliminating stock that does not generate sales. Operators understand that their drink range must align with guest expectations.

Moreover, competition for bar space is intensifying. Therefore, drinks suppliers must craft compelling sales narratives. These stories should highlight why their brands deserve a spot on the menu. It is crucial to balance quality and value while emphasizing reliability and sustainability. Ultimately, listening to venues and providing necessary support is vital for success.

Strategies for Drinks Suppliers in a Competitive Market

In light of the current economic climate, drinks suppliers must adapt their strategies. Operators are closely monitoring category performance to optimize their offerings. This means removing underperforming categories to make room for growth. The long alcoholic drinks (LAD) category is experiencing significant changes. For instance, 11% of businesses have already switched their primary supplier.

Furthermore, operators are planning to reduce their ranges of certain drinks. For example, 16% are cutting draught standard lager, while 10% are reducing packaged cider. Gin ranges are facing even more significant cuts, with 22% of operators making adjustments. The influx of celebrity-led brands has intensified competition in this category.

To remain competitive, suppliers must offer more than just products. According to the survey, 72% of operators seek competitive pricing from their suppliers. Additionally, they value staff training and support. Sustainable initiatives and reliable deliveries are also essential components of supplier packages. By addressing these needs, suppliers can strengthen their partnerships with hospitality operators.

Meeting Consumer Demands in the Evolving Drinks Landscape

Consumer preferences are shifting, and operators must adapt to these changes. The CGA’s On Premise User Survey highlights the importance of value for money. For consumers, a drink must be of good quality and worth its cost. This is particularly true in the beer category, where quality is paramount. Meanwhile, innovation and visual appeal are crucial for cocktails.

As operators look to the future, they are identifying growth categories. Notably, there is a rising demand for no and low alcohol options. In fact, 42% of operators plan to expand their range of these beverages. Spirits, including Tequila, are also seen as growth opportunities, with 39% of operators looking to increase their offerings.

In conclusion, the hospitality sector is undergoing significant changes due to rising costs and shifting consumer preferences. Operators are rationalizing their drink ranges and seeking strong partnerships with suppliers. By understanding these dynamics, both operators and suppliers can navigate the challenges ahead.

Photo by Johnny Briggs on Unsplash

Source: Harpers – Hospitality ramps up range rationalisation in response to growing costs