What the 2024 Autumn Budget Means for Your Hospitality Profits

If you’re running a hospitality business, the 2024 Autumn Budget (taking effect from April 2025) probably felt like a gut punch. 

Rising labour costs, slashed business rates relief, and increased National Insurance Contributions (NICs) have combined to create one of the toughest environments for UK restaurants, pubs, and cafés in years. For an industry already stretched thin by post-COVID challenges, these changes could be make-or-break.

But while the news isn’t great, it’s not all doom and gloom. The key to survival (and profitability) lies in preparation. In this article, we’ll break down the biggest changes, explain their impact, and share practical tips to help your business adapt.

TLDR: Key Changes in the 2024 Budget

Labour Costs: A Double Blow

Labour costs are already one of the biggest expenses in hospitality, and the new budget is about to make them even heavier. A few major changes are driving this:

• National Living Wage (NLW): From April 2025, the NLW will rise by 6.7%, rising to £12.21/hour for workers aged 21 and over.

• Youth Wage Alignment: The rate for 18- to 20-year-olds will jump significantly – from £8.60 to £10, a 14.8% increase.

• National Insurance Contributions (NICs): Employer NICs will increase from 13.8% to 15%, and the tax-free threshold for NIC payments will drop from £9,100 to £5,000.

So, What Does This Mean for An Independent Restaurant?

Let’s say you run a restaurant generating £500,000 annually with 12 full-time staff (8 over 21 and 4 aged 18-20). Currently, your labour costs account for 35% of revenue – £175,000 annually.

Here’s how the budget changes will impact your bottom line:

• Wage Increases: The NLW hike adds about £18,400 annually for staff over 21, and the jump to £10/hour for younger staff adds £11,648 annually.

• National Insurance Contributions (NICs): The NIC increase adds an additional £2,304 annually across all employees.

Total Labour Cost Increase: £32,384 annually.

After these changes, labour costs rise from £175,000 to £207,384, or 41.5% of revenue.

This increase is a huge blow for a small restaurant, especially in an industry where profit margins often fall below 5%. 

The National Living Wage increase is great news for workers, and it could even help with retention. But for employers, it’s another story…

The result? Higher payroll costs, tighter margins, and tough decisions about staffing. Many operators will be forced to rethink hiring plans, reduce hours, or pass costs onto customers through higher prices.

Business Rates Relief: A Big Step… Backwards

Since 2023, hospitality businesses have benefited from a 75% reduction in business rates, capped at £110,000 per business. This relief was a lifeline for businesses struggling to recover from the pandemic. 

But from April 2025, the discount will drop to 40% – and for a lot of businesses, rates bills will more than double.

Example Impact:

Let’s say your restaurant’s property is currently valued at £100,000 for rates purposes:

• With a 75% discount, you’re paying around £5,000/year.
• With the new 40% relief, that jumps to over £12,000/year.

That’s a huge jump, especially when margins are already razor-thin.

Long-Term Changes:

The government has announced plans to introduce a permanently reduced rate for retail, hospitality, and leisure (RHL) properties from 2026. While that’s promising, it doesn’t help businesses grappling with these immediate increases.

The Upsides: Small Wins in a Tough Budget

While the budget is mostly bad news, there are a few glimmers of hope:

• Employment Allowance Increase: The tax-free allowance for NICs will rise to £10,500. This is a small win for smaller businesses, helping offset some of the NIC increases.
• Business Tax Multiplier Freeze: The freeze on the multiplier used to calculate business rates, remaining at 49.9p, offers some stability.
• Draught Duty Cut: Pubs and bars serving draught beer will benefit from a 1.7% reduction in duty – a small but welcome relief.

These measures won’t offset the rising costs, but they do provide a small margin for certain types of businesses.

How to Adapt and Stay Ahead

Here’s the good news: while the budget changes are challenging, they’re not insurmountable. With the right strategies, you can protect your margins and even find opportunities for growth.

1. Track Prime Costs Weekly

Prime Costs (labour + food + beverage costs) are your biggest controllable expenses. Monitoring them weekly – rather than monthly or quarterly – gives you the visibility to spot problems early and make adjustments before they spiral out of control.

2. Optimise Staffing

Smart scheduling is more important than ever. Align your staffing levels with actual demand to avoid over-scheduling during quiet periods. Cross-training employees can also help you get more flexibility without hiring additional team members.

3. Engineer Your Menu

Look closely at your menu and identify high-margin items that can drive profitability. Standardise portion sizes, reduce waste, and eliminate underperforming dishes.

4. Leverage Technology

Automating tasks like accounting, inventory tracking, and payroll management can save you time and reduce errors. The less time you spend on admin with smart technology, the more time you have to focus on running your business.

5. Renegotiate Supplier Contracts

Now’s the time to have tough conversations with your suppliers. Can you secure better rates by buying in bulk? Or switch to local vendors to cut delivery costs? Every little bit helps.

Why Now is the Perfect Time to Rethink Your Accounting

If there’s one thing this budget made crystal clear, it’s this: knowing your numbers isn’t optional – it’s survival. With rising labour costs, reduced business rates relief, and tighter margins, you can’t afford to wait months for financial insights or waste time on admin. You need clarity, and you need it now.

That’s where Outmin comes in. We take the grind out of accounting so you can focus on what really matters – running and growing your business. Here’s how we do it:

• AI Bookkeeping: Accurate, fast, and fully automated. No chasing receipts, no manual data entry – just bookkeeping that works without you lifting a finger.
• Reporting That Actually Helps: From daily cash flow updates on your dashboard to detailed management packs (weekly or monthly), you’ll always know exactly where you stand.
• Everyday Accounting Made Easy: Tax, invoicing, suppliers, payroll? Sorted. We’ll even help with less frequent but important tasks like funding applications or registrations.

Our approach isn’t just about saving time (though we do that too). It’s about giving you confidence in your numbers so you can make better decisions.

Take Pi Pizza, for example – they cut their accounting costs by 66% with Outmin while improving financial visibility. All without lifting a finger! If they can do it, so can you.

Let’s face it: the old way of doing accounting doesn’t cut it anymore. If you’re ready to take control of your numbers and future-proof your business, we’re here to help. Book your free demo today.