The latest budget introduces a new wave of cost pressures for hospitality. Some measures offer small openings for growth, but many will force operators to rethink how they run, staff and buy. 

Rather than reacting late, businesses now need a clear view of which changes matter most and how to stay profitable in a tougher cost landscape.

Wages Are Going Up Again – And Productivity Has to Follow

Another jump in the National Living Wage is coming in 2026. All youth rates rise too. For a sector built on people, this is the most immediate pressure point. Labour costs will rise across the board — front of house, back of house, housekeeping, events, bars.

Standing still isn’t an option.

How operators stay ahead:

• Redesign rotas so every hour is purposeful, not habitual.
• Cross-train teams so fewer people can cover more tasks without burning out.
• Use apprenticeships to grow talent while containing training spend.
• Adopt labour-light workflows — digital ordering, handhelds, simplified BOH routines.

Business Rates Are Changing – And Some Operators Will Pay More

On paper, business rates go down in 2026–27 thanks to lower multipliers for hospitality. But the hidden twist is that the current 40% discount disappears. 

For some operators this cancels out. For others, especially multi-site groups who hit the relief cap, there’s a risk of higher bills.

How operators stay ahead:

• Model each site now. Remove the relief. Apply the new multiplier. See the real number.
• Identify vulnerable sites early and start conversations with landlords long before bills land.
• Challenge valuations where they don’t reflect today’s trading reality.

Duty Is Rising – And Menus Need a Rethink

Alcohol duty rises with RPI in early 2026. The sugar levy widens to pre-packaged milk-based drinks. For bars, pubs and premium restaurants, that means higher input costs on wines, spirits and RTDs. For hotels and caterers, it means suppliers will pass increases through.

How operators stay ahead:

• Refresh drinks lists with a focus on contribution, not just popularity.
• Dial back duty-heavy serves and spotlight alternatives with stronger margins.
• Swap RTDs for fresh-made options where margin and creativity are stronger.
• Bundle and pair to shape consumer choice without shouting about cost pressures.

Demand Behaviour Is Shifting – And Value Perception Is Everything

Even before the budget, consumers were cautious. Fiscal drag continues to squeeze take-home pay, and discretionary spending is still slow. On top of that, mayors will soon have the power to introduce visitor levies — potentially adding cost to overnight stays in major cities.

How operators stay ahead:

• Move prices gradually, not in big jumps that break trust.
• Elevate value perception—prix fixe menus, tasting formats, seasonal bundles.
• Get ahead of the visitor levy: hotels should model scenarios now—not after the first city announces its plans.
• Strengthen destination appeal through experiences, not discounts.

The Perfect Partner

Amidst this pressure, the right group purchasing organisation becomes a valuable part of your mitigation strategy. 

A GPO strengthens your buying power, giving you access to pricing and value that are hard to secure alone — essential when wage costs, duty and supplier prices are all rising. 

Entegra builds on this foundation by offering advisory support, digital tools and CSR guidance designed specifically for hospitality, helping operators make informed decisions across their entire cost base.

If you’d like to explore how Entegra can support your business in this environment, we’d be happy to talk.