The hospitality industry is facing one of its most challenging times in decades. Rising costs, especially around staffing, are creating a significant strain on restaurants and takeaways, making it harder for business owners to remain profitable while continuing to deliver quality services. With the most recent UK government’s budget announcing an increase minimum wage and other employment-related costs in April 2025, it's crucial that restaurants and takeaways take proactive steps to protect their margins and ensure long-term sustainability.
As businesses that rely on both the quality of their food and their workforce to maintain customer satisfaction, navigating these rising staff costs requires strategic planning, innovation, and a shift in operations. In this article, we’ll explore practical solutions and strategies that can help restaurant and takeaway owners cope with rising staff costs in the face of government budget changes.
Understanding the Impact of Rising Staff Costs
Staff costs are often one of the largest expenses for any restaurant or takeaway business. As the government is expected to increase the national minimum wage and other related costs, business owners will see an immediate increase in their payroll expenses. With rising energy bills, supply costs, and rent also contributing to financial pressure, the situation will require creative and strategic thinking.
Here are some key factors contributing to rising staff costs:
Increased National Minimum Wage: The government’s planned increase in the minimum wage in April 2025 will directly affect the hourly wages of staff, putting additional pressure on restaurant and takeaway profit margins.
Pension Contributions & Benefits: In line with wage increases, employers are also required to contribute to pensions and other benefits, adding further to their operational expenses.
Labour Shortages: There is currently a shortage of skilled hospitality staff, which drives up wages as businesses compete to attract and retain talent.
Training and Retention Costs: Recruiting and retaining skilled staff requires not only offering competitive wages but also investing in ongoing training, which increases overall staffing expenses.
With all these factors in play, restaurant and takeaway owners need to rethink their business models and find innovative ways to reduce costs without compromising on service quality.
How to Navigate Rising Staff Costs: 7 Practical Strategies
Here are seven strategies that can help restaurant and takeaway owners manage rising staff costs and ensure business survival and profitability as costs continue to climb in 2025.
Optimise Operations with Technology
Technology can play a crucial role in increasing efficiency, reducing waste, and managing staff better, all of which help to offset rising labour costs.
Point of Sale (POS) Systems: Upgrade your POS system to track real-time sales data, inventory levels, and customer preferences. This will help you manage staffing more efficiently by aligning the number of employees with demand.
Automated Ordering: Consider using self-service kiosks or online ordering systems to reduce the reliance on front-of-house staff, especially during peak hours. With the rise of food delivery services, offering a smooth, efficient ordering process through apps can further streamline operations.
Scheduling Software: Use staff scheduling software to optimise shift planning. By better matching staffing levels with demand, you can reduce unnecessary overstaffing while ensuring you have enough staff during busy periods.
Digital Payment Options: With the increase in online orders and delivery, integrating digital payment systems can reduce in-store payment handling, saving time for your team and minimising the need for front-of-house staff during quieter periods.
Embrace the Delivery-Only Model (Virtual Kitchens)
One of the most effective ways to cut down on staffing costs is by embracing the growing demand for food delivery services. Virtual kitchens (also known as ghost kitchens) allow restaurants and takeaways to operate without the need for a dine-in space or front-of-house staff.
By using delivery platforms like UberEats, Deliveroo, or JustEat, you can scale your operations without the overhead of managing a physical dining area. Additionally, a virtual kitchen allows you to focus your staffing on the kitchen team, reducing the need for wait staff, servers, and other front-of-house roles.
Benefits of Virtual Kitchens:
No need for dining room staff, reducing wages and overheads.
Flexibility to serve multiple brands from one kitchen, further improving profitability.
Lower capital investment and fewer operational costs related to renting or maintaining a traditional restaurant space.
Increase Menu Prices Strategically
With staff costs rising, it’s important to reassess your pricing strategy. While raising prices can be a sensitive issue, a well-calculated price increase can help offset the additional wage expenses without alienating your customers.
Menu Engineering: Focus on your best-selling and highest-margin items, and use these as the foundation for price increases. Consider increasing prices slightly across the menu, but make sure to do it in a way that doesn’t alienate customers.
Communicate Value: When increasing prices, focus on the quality, convenience, and service you provide. Make sure customers understand the reasons behind the price increases, such as rising costs of ingredients, staffing, or energy.
Upselling & Bundling: Introduce meal deals or bundle offers to increase the average order value, allowing you to increase revenue without directly raising prices across the board.
Focus on Staff Retention and Training
Recruitment and turnover can be a significant cost for restaurants and takeaways, especially with the competitive labour market. Retaining staff is key to reducing long-term costs associated with hiring and training new employees.
Invest in Employee Training: Providing regular training will increase your team’s efficiency, meaning fewer errors and less wasted time. Staff who feel invested in through training are more likely to stay longer and contribute to a higher level of service.
Create a Positive Work Culture: Foster a positive work environment where employees feel valued. Offering flexible working hours, performance-based incentives, and clear career progression paths can improve staff morale and reduce turnover.
Offer Employee Benefits: Providing additional perks, like meal discounts, performance bonuses, or staff outings, can help you retain your top performers. These benefits do not always have to be costly but can significantly improve employee satisfaction and loyalty.
Cross-Utilise Staff Skills
Maximising your staff’s skills and versatility is key to keeping your business lean without compromising the quality of your service.
Multi-Skilling: Cross-train your employees so they can handle different roles across the restaurant. For instance, kitchen staff can also help with deliveries or prep work, and front-of-house staff can assist with stock management during quieter hours.
Flexible Staffing: By creating a flexible workforce, you can adapt to demand surges without needing to overstaff during slower periods. This not only reduces labour costs but also ensures that you have the right people in place at all times.
Leverage Local Sourcing and Seasonal Ingredients
Sourcing ingredients locally and seasonally can save your restaurant or takeaway a significant amount in both ingredient costs and transport expenses. Local produce is often cheaper and fresher than those imported, and using seasonal ingredients can further cut costs as they are more abundant and cheaper.
Reduce Waste: Implement inventory management systems to track ingredient usage and reduce waste. By purchasing ingredients based on demand and seasonal availability, you can avoid overstocking and spoilage.
Support Local Suppliers: Building strong relationships with local farmers and suppliers can also lead to discounts, better-quality products, and the ability to negotiate on prices.
Streamline Menus for Efficiency
Simplifying your menu is one of the easiest ways to reduce staff costs. A leaner menu allows your kitchen staff to focus on the best-selling and most profitable items, which in turn reduces prep time and potential for mistakes.
Focus on High-Margin Items: Identify which dishes generate the highest profit margins and prioritise them on your menu. Consider removing lower-margin items that require high levels of staffing or extensive preparation.
Smaller Menu = Faster Service: A smaller menu allows your team to work more efficiently, increasing table turnover and improving service speed. Fewer ingredients also mean fewer staff are needed for preparation.
The restaurant and takeaway industry faces significant financial challenges as staff costs rise in line with the government’s budget increases in 2025. However, there are numerous strategies that can help businesses reduce their operating expenses, increase profitability, and safeguard their bottom line.
By embracing technology, optimising operations, and finding innovative ways to save on staffing and ingredient costs, restaurant owners can navigate these challenging times. It’s also essential to focus on customer satisfaction and retention through excellent service and quality, which will continue to drive revenue despite higher operational costs.
At Amici Brands, we understand the importance of efficiency and innovation. Our franchise opportunities for delivery-only brands, such as Rory's American Diner and Winger Winger, offer restaurant owners the chance to increase revenue while keeping costs manageable.
Contact us today to learn more about how we can help you navigate the rising costs and build a sustainable, profitable business.
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