Aggressive discounting “damages productivity"

By Joe Lutrario contact

- Last updated on GMT

Aggressive discounting “damages productivity"

Related tags: Hotel

Hospitality software supplier Fourth says that productivity across the restaurant sector has fallen, with the key measure of sales per labour hour currently sitting at £30.65 – a 43p reduction since May 2017.

Over the same period productivity across the wider hospitality industry fell by 62p to £34.01.

The figures are taken from Fourth Analytics data on the hourly pay of thousands of hospitality workers in the hotel, restaurant and pub sectors. The analysis also reveals that wages as a percentage of sales have risen 1.3% in the restaurant sector, and 0.9% in the wider hospitality sector over the same period.

Fourth says its numbers have been impacted by heavy discounting across the restaurant and casual dining sectors, with many groups pursuing aggressive discounting policies in the UK over the past four-to-six weeks.

Cost pressures from decreasing productivity have been exacerbated by continued wage-cost inflation, with the average hourly wage in the hospitality industry now sitting at £8.28, a rise of 2% since May 2017, which is 3% above the Government’s target of reaching £8.05 by April 2018.

“Our figures show that a domino effect of aggressive discounting in the hospitality industry, particularly the restaurant sector, has taken a heavy toll on productivity as brands compete for custom in a very competitive market place,” says Fourth analytics and insight solutions director Mike Shipley.

“Discounting is a quick fix to this complex situation and with Brexit looming on the horizon, it’s imperative that operators scrutinise all aspects of their operation to understand where they can cut costs.”

Related topics: Business

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