As the hospitality industry braces for a challenging year, businesses face rising operational costs due to the 2024 budget changes, putting pressure on already tight margins. Callum Quirk, hospitality solutions expert at Vita Mojo, explores how technology can help hospitality businesses navigate these financial pressures, improve efficiency and drive sustainable growth.

The hospitality industry is approaching a tough and uncertain time. In April, the changes announced in the autumn 2024 budget come into play, including an increase in the minimum wage, higher national insurance contributions and business rate adjustments. For many hospitality business owners, these rising operational costs, combined with an expected decline in discretionary spending, create a perfect storm. After a challenging few years, businesses must find innovative ways to drive efficiencies and protect their margins. This is where technology can be a game-changer.

To mitigate these tough financial pressures, it looks like hospitality businesses are going to need to move beyond traditional cost-cutting strategies. Some operators are opting for a 12-15% price increase across the board to recover lost profit margins. While this strategy may have short-term benefits, there is a concern that passing this on to customers will mean a loss of loyalty, and that customers seek out cheaper options. Brands need to strike a balance between looking after their customer base and protecting their bottom line.

Instead of reducing staffing levels, which can mean losing the heart of the customer experience, operators can look at how technology might simplify operations making things more efficient and ultimately help drive sustainable growth.

Vita Mojo has recently produced a report examining how tech can support hospitality business owners navigate the current challenging landscape. The key takeaway? The right technology, paired with a strong strategic approach, can even turn these industry-wide challenges into opportunities for growth.

Tech solutions: The key to 'operational efficiency'

One of the most effective ways technology can support hospitality businesses is by improving operational efficiency. With payroll costs set to rise by an estimated 12-14%, reducing reliance on manual processes and making repetitive tasks automatic can offer significant savings.

Some of the ways our customers use technology to enhance efficiency include implementing self-ordering kiosks, reducing reliance on staff while increasing transaction speed and average transaction value. Research shows customers tend to spend more at kiosks thanks to intuitive basket and bundle recommendations. Having a staff member present to greet customers and offer assistance means you don’t lose the personality side when switching to kiosk.

Another way in which technology can improve operational efficiency is by introducing Pay-at-Table functionality, particularly in the QSR and fast casual space where a full on service isn’t expected. Digital menus and self-payment options not only improve table turnover times but also cater to a younger demographic – 95% of Gen Z prefer digital ordering over traditional methods. Giving customers choice around how they interact with your brand will build customer sentiment and profit.

Finally, adding a service like Click & Collect (C&C) can help expand ordering channels by improving customer convenience for operators in high-footfall locations. It also enhances engagement, C&C can be incentivised with loyalty to give customers a reason to order this way, and ensure customers are engaging with your brand. Finally, it supports revenue growth.

By using automation, businesses can optimise scheduling, streamline inventory management and reduce food waste. These are key areas that contribute to cost efficiency but also appeal to customers looking for businesses with green credentials. 

Building tech-driven resilience

As businesses are braced for increased costs, prioritising long-term, sustainable growth over rapid expansion is critical. Many operators conduct thorough tech reviews to identify where things could be more streamlined. The goal is not only to weather the financial storm but also to position themselves for future success. Instead of pulling back entirely, forward-thinking brands use technology to refine and strengthen their existing operations, ensuring they remain competitive despite rising costs. 

However, adding digital order channels should be cautiously approached if you plan to use different providers for each service. This can mean headaches from a data gathering and menu management point of view. Operationally, streamlining everything with one tech partner can help you future proof, especially when you have multiple sites. 

Technology shouldn’t just be about tools; it is also about partnerships. Businesses that treat their technology providers as strategic partners rather than simply someone selling a service will be better positioned to thrive. A tech partner can then evolve alongside a business, offering customised solutions, as they learn the company's unique challenges and growth goals. 

A staggering 87% of large hospitality businesses report frustrations with their current point-of-sale (POS) systems. Ensuring that a technology solution is efficient and scalable is crucial for businesses seeking resilience amid financial pressures.

The hospitality industry is facing one of its most challenging periods. While cost pressures are unavoidable, businesses embracing technology will be better equipped to survive and thrive. By leveraging digital solutions to improve efficiency, investing in sustainable growth strategies and forming strong tech partnerships, operators can safeguard their bottom line and future-proof their businesses.

In today’s hospitality landscape, tech-driven efficiency isn’t just an advantage, it’s more of a necessity. The brands that recognise and act on this reality now will be the ones that emerge stronger on the other side of the storm.