The hospitality sector, and the wider food and drink industry, continue to face an unforgiving environment shaped by staffing pressures, soaring costs and shifting legislation. While the Spring Statement 2025 brought no immediate changes to VAT or National Insurance, the Budget confirmed a tighter compliance regime, renewed focus on digital reporting, and no new reliefs for hard-hit sectors like hospitality.
Despite the challenges, Northamptonshire’s food and drink scene remains full of energy and potential – and with the right financial planning, small businesses can stay resilient and ready for growth.
Here’s our updated menu of practical tips to help independent businesses thrive in 2025 and beyond:
Know your financials: monitor cash flow like a maître d’ watching front of house. With inflation easing but cost pressures lingering, regular cash flow reviews help keep your operation nimble. Use cloud software to track daily income and outgoings, and watch for opportunities to renegotiate supplier rates, reduce waste, and switch to energy-efficient appliances – particularly with energy prices still unpredictable.
Use forecasting tools: peak seasons, local events and staff availability can all be planned for using simple forecasting software. Knowing your quietest weeks helps avoid overstaffing, while flagging high-demand periods early can help you stock and schedule smartly. These insights also help with financial planning and avoiding surprises when tax and VAT deadlines approach.
Keep track with regular stock checks: especially for pubs, bars and cafes, regular stock audits prevent shrinkage and support accurate profit tracking. If you’re losing more pints than you’re pouring, poor training or mismanagement may be at fault – both of which are fixable with the right attention. Your stock report is also a great tool for identifying which drinks or menu items are driving margin – and which aren’t worth the fridge space.
Strategic pricing adjustments: with no VAT cut on the table and supplier costs unlikely to drop soon, pricing needs to reflect real-world pressures. Review margins and consider small increases where needed. Don’t forget: customers are more likely to accept price changes when value and experience remain strong. Be transparent with your messaging – loyal customers value honesty.
Manage debt responsibly: many businesses took on extra borrowing during Covid and haven’t yet cleared it. If you’re repaying older debts at high interest rates, look at refinancing options while rates are relatively steady. Government-backed lending schemes may still be available through regional growth programmes. Keeping debt manageable ensures flexibility to invest when the right opportunity arises.
Maximise VAT recovery: with HMRC increasing late-payment penalties and scrutiny, it’s more important than ever to correctly recover VAT on eligible expenses. This includes equipment, utilities and refurbishment costs. Properly separating taxable from exempt sales – and logging every input VAT line – keeps you compliant and avoids leaving money on the table.
Diversify your revenue streams: successful operators are branching out – offering event catering, running pop-ups, hiring out their space or adding an e-commerce arm. Digital ordering, delivery platforms and community partnerships (e.g. farm-to-table suppliers or local breweries) all create new revenue without needing to open new premises. Be bold but strategic. If you’re launching a new idea, speak to your accountant first – there could be tax incentives or funding available.
Prioritise the customer experience: in a competitive market, personality and presentation matter. Invest in training your team to deliver friendly, consistent service, and find small touches that bring your brand to life – live music nights, unique pairings or menus tailored to dietary needs. Survey your regulars, trial new ideas and review customer feedback often. When margins are tight, retention is cheaper than constant outreach.
Build a resilient workforce: the labour market remains tight – especially in hospitality. While the Spring Statement focused heavily on welfare reform and public spending, it gave no new support for business-led recruitment or training schemes. That puts the onus on employers to reward and retain their teams. Offer development opportunities, flexible schedules and recognition for hard work. Great staff create loyal customers.
Prepare for digital tax compliance: Making Tax Digital is expanding. From April 2026, sole traders and landlords earning over £50,000 must keep digital records and submit quarterly updates. This drops to £30,000 in 2027 and £20,000 in 2028. Even if you’re not affected yet, now’s the time to adopt cloud-based accounting software and speak to your accountant about set up. HMRC has confirmed tougher penalties for late submission and payment, so getting ahead of the curve will pay off.
We’re not reinventing the wheel here – but we are saying that now is the time to keep it turning. Strategic thinking, solid processes and digital tools can help small businesses stay one step ahead.
At Cottons Group, we support hundreds of hospitality businesses across the Midlands and beyond – from startups to well-loved establishments. Whether it’s navigating VAT rules, reducing debt, or planning for the future, we’re here to help you beyond the numbers.
Find out more by visiting our website.
