NICs raise could dampen hospitality recovery momentum

Restaurant openings in the third quarter grew by 0.7%.

The increase in National Insurance Contributions (NICs) could potentially dampen the growth in the hospitality sector, an analyst from CGA by NIQ said.

According to the latest Hospitality Market Monitor from CGA by NIQ and AlixPartners, Britain’s number of licensed premises has increased for a second successive quarter, rising 0.7% between July and September. This is equivalent to 661 net new openings or seven per day.

It follows 0.5% growth in the second quarter of the year, which was the first positive quarter-on-quarter movement since mid-2022. The latest increase brings Britain’s total sites to 99,868—virtually level with the figure 12 months ago.

Karl Chessell, CGA by NIQ’s director – hospitality operators and food, EMEA, said that though two successive quarters of growth in site numbers is an encouraging sign of hospitality’s strength in the face of major challenges, the looming substantial extra costs on labour and rates is a real danger to the industry’s momentum.

In October, the government announced that it would raise the NICs that employers pay by 1.2 percentage points to 15% starting April 2025.

“Whilst the sector is smaller in outlet terms than before COVID, the last six months have shown that hospitality groups, investors and entrepreneurs have been confident enough to be opening rather than retrenching. With inflation, GDP and other economic indicators moving in the right directions, the sector should be looking forward to 2025 with guarded optimism,” Chessell said.