While the cost-of-living crisis has created difficult operating conditions over the last 12 months, Quantaco’s Hospitality Industry Update Q1 2025 highlights the resilience of the industry in the face of economic downturn.
Analysing the performance of the hospitality industry for the period of July to September 2024, data in the report is drawn from a broad range of industry participants, with metrics based on averages across the industry.
Despite the cost-of-living pressures facing many consumers, Quantaco identified seven per cent growth in total weekly sales year-on-year, amounting to an average of $10,000 per week, and three per cent growth in food weekly sales.
Previous periods have indicated a decline in weekly beverage sales, but data from the latest quarter puts a halt on this trend, with weekly beverage sales overtaking food sales at four per cent growth, rising from $49k in Q1 2024 to $51k in Q1 2025 and showing a sharp increase in sales in September.
The report states: “This suggests a positive trend in customer demand for beverages, which could be attributed to factors such as promotional campaigns, an expanded drink menu, or enhanced customer service that engages patrons more effectively.”
Not only is the outlook positive for food and beverage, but also for gaming, which continues to drive sales growth for pubs, recording a 12.9 per cent increase in gaming turnover between Q1 2024 and Q1 2025, jumping from $782k to $883k.
While on-premise revenue streams are reversing declines seen in previous periods, the off-premise recorded a drop in sales, with overall bottle shop sales down 15 per cent compared with the same quarter last year.
Expenses continue to rise
With sales once again on the rise there is a hopeful outlook for the year ahead, but not without the continued challenge of rising expenses, which is prominent across all categories.
Key expense metrics for the hospitality industry show varied trends, with some areas recording a modest increase, such as cleaning expenses (two per cent), security expenses (two per cent) and insurance costs (four per cent).
There are, however, several significant increases such as utility costs which have risen by 17 per cent, driven by a 24 per cent rise in electricity costs, and a 44 per cent increase in marketing expenses, making effective cost management crucially important.
In terms of profitability, Quantaco reported one per cent growth overall for EBITDAR, but a decline of one per cent in both food sales and beverage sales gross profit, attributed to the cost of goods rising more than revenue, and discounting being used to drive growth but in turn impacting profitability.
One of the ways in which operators are combating these challenges is to maximise staff efficiency, with wages as a percentage of sales remaining relatively static, decreasing by just 1.4 per cent across the quarter.
An analysis of wages as a percentage of food sales recorded a two per cent reduction year-on-year, while wages as a percentage of beverage sales remained flat, which Quantaco attributes to businesses becoming more efficient in staffing and adjusting labour in line with sales, resulting in lower wage costs relative to sales.
