EXCLUSIVE! Our new & revealing Q&A with... Kate Nicholls, CEO of UKHospitality

If you missed this new feature of FS News on Friday, here it is again and we are running it all this week.

Foodservice News Editor, Becky Martin asks UKHospitality boss, Kate Nicholls, the major business questions of the moment, and then gets ay little more personal.

1. How do you think Putin’s war on Ukraine is already affecting the hospitality industry and how bad do you think this could potentially get?

If the war drags on it could certainly have a significant and damaging effect in terms of rising costs for raw goods – wheat and barley, for example – and of course energy.

A joint survey conducted by UKHospitality, the British Institute of Innkeeping (BII), the British Beer and Pub Association (BBPA) and Hospitality Ulster revealed that 76% of businesses are mitigating skyrocketing energy costs – average increases are a remarkable 95% – by reducing their gas and electricity usage and raising prices, while 38% have been forced to cut their trading hours.

At the same time the industry has yet again shown its compassion and community spirit with the overwhelming support it is showing for those affected by this tragedy. We have been overwhelmed with offers of ways to support those arriving in the UK, and will be working hand-in-hand with the Government to help provide accommodation, as well as food, community support and jobs for those forced to flee their home under the most terrible of circumstances.

2. In what ways do you think the Government can further help hospitality operators in a post-pandemic world?
The industry’s big ask from the Chancellor’s Spring Statement – freezing VAT for hospitality and tourism at 12.5% – wasn’t forthcoming, but there’s still much that the Government can do to help hospitality lead the UK’s post-pandemic economic recovery. Indeed, it already has: the Commercial Rent (Coronavirus) Bill is decisive Government legislation to deal with the £7bn-plus rent debt accrued during the pandemic by businesses across all sectors.

We’re also anxious for the Government to introduce meaningful reform to the business rates system, including a differential, lower rate for hospitality. The business rates system is frankly unfair, especially to pubs, requiring our industry to overpay by 300% relative to its turnover, and as a tax it actively works against the Government’s levelling up agenda by deterring investment in skills and local communities. We also need to see a fully functioning infrastructure to ensure that business rate valuations are accurate and that appeals are accessible.

3. What do you think are the greatest challenges facing hospitality in the coming months?
The sector faces multiple hurdles – most of them financial – as it begins its post-Covid recovery: huge accumulated debt, rising energy costs, chronic staff shortages, higher prices for raw goods and VAT back to 20%. All of it in the midst of a cost-of-living crisis that is squeezing the finances of customers we hoped were about to return to their favourite pubs, bars and restaurants in their millions.

Add the red tape and costs that new regulations will bring, including reducing single-use plastics, and it makes for a bleak outlook. But ours is a resilient and innovative industry, and it will get through this difficult period to emerge stronger and fitter, and ultimately better placed to provide amazing experiences for customers, once consumer confidence begins to return.

4. How can operators shore up their business when tackling these challenges?
Driving productivity is going to be a key part of the fight to survive. Technology will be a significant element of that and we expect to see investment in tech as a result, a continuation of what we’ve seen in the sector through the pandemic.

Most importantly, however – and as ever – will be people. Those businesses that are able to attract and retain great teams will have a much better chance at survival than those who cannot. This isn’t just about wages, which have in any case increased over recent years in the sector, but about support and training and showing how hospitality is an industry that offers not just jobs but a wide range of rewarding and fulfilling career paths.

5. What are your trend predictions for the industry this year?
I think 2022 will be another year of volatility for the sector. Business will be tough, given soaring cost inflation (see above) and the return to 20% VAT and it’s inevitable that not all businesses will survive. We will see a slow return to ‘normality’, however, as footfall returns to town centres and office working opens up. Strong operations and those that can adapt to this different way of working, will bounce back well.

6. What are your hopes for the hospitality industry by the end of this year and in the next 5 years?
Pre-Covid, the hospitality industry created £130bn in economic activity and generated £39bn of tax for the Exchequer, funding vital services. It also represented 10% of UK employment, 6% of businesses and 5% of GDP, and remains the third largest private sector employer in the UK; double the size of financial services and bigger than automotive, pharmaceuticals and aerospace combined.

By the end of this year I’d hope to see it well on the way back to those sort of numbers; while in the next five years I’d expect it to be fully restored to a thriving and profitable sector, attractive to those seeking rewarding, long-term careers; attracting investment; embracing technology to enhance the customer experience; and with UK destinations and venues competing with overseas rivals and popular once more with visitors from abroad.

1. What helps you to relax?

When I’m working I do use deep breathing Alexander technique exercises to let go of stress, something which is particularly helpful when going to do presentations or speeches. Otherwise, it's a good book or a long walk to clear the mind – I often cope with juggling multiple balls by compartmentalising, and so switching to something totally different like reading fiction is a good relaxant for me.

2. What is your favourite on-the-go snack, lunch and beverage?
Smoked almonds or Pret A Manger’s dark chocolate covered almonds for a snack. For lunch, sushi and a diet coke, please.

3. What’s your most loved restaurant or café and pub or bar?
I have a wide range of favourites on rotation, depending who I’m with and what the occasion is. I love street food so my local Korean neighbourhood restaurant is a favourite or the Red Lion, a Fuller’s pub in Ealing that has a great beer garden and does a delicious pizza or, if I’m in London, then I love the bars at The Rosewood Hotel or The Stafford, and I often eat out at Hawksmoor, Mowgli and Din Tai Fung.

4. Beyond your laptop and phone, what items are you never without during the week?
A book, notepad, pen and gum.

5. What book or/and TV/Netflix etc programme currently has you gripped?
I have three books on the go at the moment: Silverview, the last John le Carre; The Devil and the Dark Water by Stuart Turton, and I’m re-reading F Scott Fitzgerald’s The Beautiful & The Damned.

I always have an old favourite to re-read alongside something new. I don’t get to watch much TV but I’m savouring the last series of Killing Eve – I just love Jodie Comer’s fashion.

6. What have you learnt most about yourself and what do you see as your greatest achievements in the last year?
I’ve learnt to trust my instincts and my ability to make decisions at pace, to pivot and to be agile. I’ve also found that I am more resilient and optimistic than I would have anticipated and that I clearly thrive under pressure.

I work best collaboratively, however, and think building the coalition and team, not just in UKHospitality but more widely across the sector, creating the forums and links to enable people to work to support each other, is probably my greatest achievement.

Thank you, Kate, for being our very first Q&A star - that was most insightful!