Hospitality Business Owners facing an 18% drop in revenue are urged to increase their prices or prepare for a smooth exit in 2024 with 30% of privately owned businesses set to change hands in the next 5 years!
In the bustling world of hospitality, where the aroma of freshly brewed coffee mingles with the holiday spirit, there lies a tale of resilience and transformation.
The industry, grappling with the complexities of the cost of living crisis and soaring operational costs, is finding innovative solutions to not just survive, but thrive and exit with confidence in the face of adversity.
The sector has seen a like for like decrease in hospitality revenue takings, mainly the café section by 18% year on year.
Link Business is a leading brokerage specialising in business transactions, Farzin Hesari, CEO says the challenges faced by small hospitality businesses during the festive and New Year period and beyond cannot be underestimated. “It can be a tough time for hospitality entrepreneurs. The rising cost of living and rent poses a significant threat, and there’s a genuine concern that customers might opt for a quieter summer at home,” says Farzin Hesari, CEO of Hesari.
Helping Business Owners Exit Their Sector
For some having owned a successful business for a number of years now is a good time to exit the Industry as the omens point to things getting harder in 2024.
Sally Weatherson was faced with just such a decision. With an unwell husband, wages and food costs at an all time high, despite having good landlords, Sally knew the time to sell had come, “ We decided to sell our Cafe and a Flower shop and it could have been really stressful. But Link Business and their two agents Kristy and Nick Kolaitis, they were the right people who were passionate enough to sell your life’s work, and that is comforting at a time of huge stress. They were always on the phone, kept pushing for us and kept us informed”, said Ms Weatherson.
Embracing Change and Transparency
Hesari advocates for a shift in mindset, urging businesses to move beyond the small business mentality if they choose not to exit. One proposed strategy is a modest increase in coffee prices by 50 cents. Hesari believes that customers, understanding the challenges faced by businesses, will remain loyal. “We need to break free from the fear of upsetting our customers. A slight increase in the cost of coffee won’t deter them, especially when they understand the challenges we’re facing,” he emphasises.
Utility bills and rates are on the rise, adding to the financial burden of these businesses. Hesari encourages businesses to communicate transparently with their customers. “People appreciate honesty. If they explain the situation and the reasons behind these increases, they are more likely to understand and continue supporting us,” he asserts.
To support businesses in navigating these challenges, Link Business offers a comprehensive Business Value Catalogue on its website. Farzin Hesari encourages entrepreneurs to explore the catalogue, stating, “Jump on the Link website and see the business value catalogue for yourself. We leverage data and technology, analysing trends to help you buy or sell your business successfully.”
The company employs mergers and acquisitions strategies, recognizing that 30% of private businesses are expected to change hands in the next five years. Hold onto your Coffee Cups, 2024 could be very bumpy!