Let's start with the honest summary. This is a broadly positive Budget for hospitality - mainly because we didn't get kicked. It's the first one since COVID that hasn't actively made things worse for us.
There's bad news in it, and some welcome news. But nobody is riding in on a white horse to deliver EBITDA to your business.
We marked our own homework - and the misses matter more than the hits
Twelve months ago we helped operators build their 2026 budgets, and we made eight calls. Before telling you what happens next, it's only fair we mark them.
Four landed cleanly. Revaluation did shift bills - rateable values went up 19.4% in England. VAT stayed at 20%, despite a petition with 400,000 signatures. Employer NI held at 15% on a £5,000 threshold. And we said war was likely and to lock in contracts. The Iran conflict drove the energy shock.
Wage inflation of 5%+ was half right. The National Living Wage rose 4.1% to £12.71, but 18 to 20 year olds saw 8.5%. Tronc rules tightening hasn't happened yet.
The two misses are the ones worth talking about. We called energy flat and a recession by July. Instead, diesel is up 41% since February, gas futures are up 166%, and the UK has had joint-fastest growth in the G7.
The lesson isn't to forecast better. It's to build a budget that survives being wrong - scenarios, buffers and a weekly rhythm that spots the miss in week two, not month six.
What the Autumn Budget 2026 delivered for hospitality, line by line
| Measure | What changed | Status |
|---|---|---|
| VAT at 10% | not delivered. Still 20% on every meal out. | Not delivered |
| Pubs and live music rates relief | up from 15% to 35% from April 2027. Around 32,000 venues qualify. | Confirmed |
| Small business rates relief | 100% up to £18,000 rateable value, tapering to nil at £21,000. Around 70,000 more businesses come out of rates - but it's one property only, so it won't help groups. | Confirmed |
| Hospitality rates bills | increases capped at CPI for 2027/28 and 2028/29. | Confirmed |
| National Living Wage | £12.71 to £13.21 (+3.9%). 18 to 20s go from £10.85 to £11.27. | Confirmed |
| Employer NI | no change. 15% rate, £5,000 threshold, £10,500 employment allowance. | No change |
| Alcohol duty | up with RPI from 1 February 2027. No freeze. | Confirmed |
| Overnight visitor levy | the power now extends to every Strategic Authority in England. | Confirmed |
| Savings and property income tax | up two points from April 2027. | Confirmed |
A few things worth knowing that didn't make the headlines.
Claim your employment allowance. Every employer can now claim the £10,500, since the cap was removed two years ago. Check with your payroll team that it's been claimed - it's literally ticking a box, and it's free cash.
Under-21s weren't aligned with the adult rate. I'd call that a positive. Aligning them would have put a lot of us off hiring and training young people - and plenty of us started out washing glasses at sixteen.
Selling your business got more expensive. Business Asset Disposal Relief (what used to be entrepreneurs' relief) has halved from £1m to £500k. There's a new £10m relief for "high growth businesses", but nobody knows what that means yet. My guess is it won't be bricks and mortar.
HMRC is getting sharper teeth. VAT will be collected by direct debit if you haven't paid by the deadline, HMRC can take money from your account if you repeatedly ignore collection requests, and e-invoicing in a set format is coming for everyone by around 2028, phased into 2029.
Business rates: the pub "win" covers 6% of the wage rise
This is the headline that'll get the most airtime, so let's put it on the scales.
Take a pub taking £25,000 a week. From April, the extra rates relief is worth £1,460 a year. The wage rise - with NI, pension and holiday pay - costs £22,460. Alcohol duty adds another £2,023.
That's £23,023 extra a year, or about £63 a day. On a 10% EBITDA margin, it's 17.7% of profit gone.
To stand still, that pub needs one of three things. Prices up 1.77%. Or 22 more covers a week. Or 25 fewer rota hours.
Welcome relief. But it covers 6% of the wage rise.
And for restaurants, cafes and hotels, the relief stops at the pub door. Their bills are capped at CPI - up to 3.5% - with the lower hospitality multipliers from April 2026 still in place and the 1p supplement extended for two more years.
Why pubs? Look at who's lobbying. A handful of big pub companies hold thousands of pubs between them, everyone loves their local, and pubs tend to have lower rateable values - so it costs government very little to say it has helped hospitality.
The small business relief is genuinely useful outside London. A tiny coffee shop with a rateable value of £24,000 in Marylebone gets nothing. The same shop on a lower rateable value in Bristol could save around £12,000 a year. But it's one property only, and how groups are treated still isn't fully published.
Three things to check now:
Your bill shows the hospitality multiplier. It came in last year and should be listed on your bill. Check it's been applied.
Your rateable values against the VOA. Pull them and check against the £51,000 and £500,000 multiplier cliffs. For most mixed estates, the total bill falls while most individual sites go up - so look site by site. This is one area where the no-win, no-fee rates advisors can earn their money, and they won't take it on if they don't think there's a case.
Whether you're really a restaurant. We've had sites reclassified as pubs based on their wet and dry split. Each council sets its own guidelines, but below about 55% wet you'll struggle. North of 60% to 65%, you can start making a case.
What the Budget costs a restaurant: about £141 more every day before the first cover
Now our model restaurant: £1.5m sales, 45 staff.
From April 2027 it costs £51.5k more a year to run. The National Living Wage rise is £14k of that, keeping pay gaps above it another £3.6k and employer NI £2.6k. Then food and drink add £16.8k, energy £9k, non-food £4.5k and rates £0.9k.
| Cost | Extra annual cost |
|---|---|
| NLW pay | £14.0k |
| Pay gaps | £3.6k |
| Employer NI | £2.6k |
| Food and drink | £16.8k |
| Energy | £9.0k |
| Non-food | £4.5k |
| Rates | £0.9k |
| Total | £51.5k |
That's about £141 extra every trading day before you've served anyone. On a 10% EBITDA margin, a third of your profit - 34% - is gone if you don't act.
Look at how much of that isn't the Budget at all. Food, drink, energy and suppliers are more than half of it.
It's about 3.5% of turnover, and smaller sites feel it more. A site doing £300k to £400k is looking at more like £12k to £15k.
Unless you can substantially change your operating model, that means a price rise next year. In our experience, plan for around 4% to 5%. The real question is whether you take it as one rise or as three small ones while the costs filter through.
You can do this sum for your own site in about ten minutes. It's seven lines. Here's how we built ours: the NLW rise of 3.9% on a £360k minimum wage bill, 3% on £120k of other pay, 4% on £420k of food and drink, 20% on a £45k energy bill at renewal, 5% on £90k of non-food, and 3.5% on £60k of rates.
Why no 10% VAT cut - and will hospitality VAT ever be cut?
The VAT's the Problem campaign asked for hospitality VAT to be cut from 20% to 10%. The Budget didn't do it. Here's why it matters so much, and what Tom expects next.
And VAT is still the biggest lever in pounds. A cut to 10% with prices held would be worth £136.4k a year to that restaurant - about 9% of sales. Lifting the employer NI threshold to £10k would be worth £27.8k. Even if the extra 20 points of rates relief applied to restaurants, it would be £5.2k.
Keep campaigning for it - I fully support it. But with taxes rising for everyone else, a blanket 10% cut would be a huge unfunded giveaway. If anything ever comes, I'd expect something closer to 5% on food only, with alcohol left where it is.
VAT isn't ours to pull. Structure, price, menu mix and rota are.
National Living Wage from April 2027: treat wages as the floor, not a spike
The National Living Wage was £8.91 in 2021. From April it's £13.21. That's up 48% in six years, and it now sits at about two thirds of median earnings.
It isn't going back down, and about 330,000 hospitality jobs are at or near the minimum.
Here's the number to put in front of your GMs. At £13.21, plus NI and holiday pay, every hour of labour now needs more than £45 in sales to pay its way.
That's why we'd plan labour on sales per labour hour, not on finding cheaper hours. The smaller rise this year and the gap to the younger rates are mild positives, but don't build a plan around them.
Food inflation looks calm. Your invoices won't be
Food inflation was 1.3% in September. Don't build your budget on it.
Fish is up 11.4% year on year. Diesel is up 41% since February, and December gas futures are up 166%. Suppliers have been absorbing the energy and fuel spike since February, and they'll pass it on with a six to nine month lag. That puts it on your invoices right through 2027.
So get ahead of it. Fix prices with your key suppliers before Christmas. Cut the number of delivery drops. Re-tender any non-food contract worth more than £10k. And budget non-food at +4% to +6%.
Guests will still come. They'll just choose harder
The average spend per guest eating out has gone from £20 to £28 in six years, according to Propel. That's around 40% - mostly in line with inflation, including the 10% to 11% we saw after COVID.
GfK consumer confidence is at -24, down eleven points in October. CPI is 3.5% and heading above 4% early next year. Bank Rate is 3.75%, with a rise to 4% expected on 5 November. Tax thresholds are frozen until 2031.
There is good news. Pay growth of 3.9% is ahead of inflation, for now. The NLW rise funds your youngest guests too. And UK growth led the G7 in the first half.
What it means for you is fewer occasions, each judged harder. Value is the battleground, not discounting. Midweek and lunch soften first - though we're still seeing like-for-like growth even as costs outpace it.
Government sets the weather. We choose what we do about it
The weather is grim, and I won't pretend otherwise.
Around 100,000 hospitality jobs lost in two years - 45% of all UK job losses. More than £5bn of extra cost in two years. 82% of pre-tax profit paid in business taxes. 295 pubs shut in the first nine months of 2026.
And with income tax, NI and VAT rates locked by the manifesto, the government's headroom fell from £24bn in March to £12bn. That gap was filled by stealth rather than headlines - two points on savings and property income tax (£1.1bn a year), a bank surcharge doubling from 3% to 6% for fifteen months (£0.95bn) and new company distribution rules (£0.8bn).
If you're an owner planning how you take money out of the business, hold off until the distribution rules are published in full.
But when we look at the businesses that struggle, the cause is usually much closer to home. Rent over 10% of sales. Concepts that stopped evolving. Prices changed late and small. Rotas built on habit, not demand. Numbers seen too late. No cash runway past payroll.
None of those are in the Chancellor's gift. All of them are in ours.
And most rotas have no fat left to cut, so the change now has to be structural. Counter service where it fits. Food halls, where one lot of capex can rotate concepts in and out. Groups splitting 4,000 or 5,000 sq ft sites into 2,000 to 2,500 sq ft, and the rise of the micro restaurant - ten tables, one chef.
So where's the hope?
Some of it has been delivered. Lower hospitality multipliers, now permanent. Pub relief going from 15% to 35%. Caps on revaluation rises. Small business relief up to £18k. And growth at the top of the G7.
Some of it is still open. Hospitality VAT at 10%. Employer NI relief. Rates help for restaurants. Wider rates reform. A settlement on tronc.
And there are new headwinds - the overnight visitor levy, the energy shock, rates rising with CPI, a likely Bank Rate rise and duty rising with RPI.
Delivered
- Lower hospitality multipliers, now permanent
- Pub relief from 15% to 35%
- Caps on revaluation rises
- Small business relief up to £18k
- Growth at the top of the G7
Still open
- Hospitality VAT at 10%
- Employer NI relief
- Rates help for restaurants
- Wider rates reform
- A settlement on tronc
New headwinds
- Overnight visitor levy
- The energy shock
- Rates rising with CPI
- A likely Bank Rate rise
- Duty rising with RPI
The real hope sits with consumer sentiment and the wider economy. But hope is not a plan.
How to build a 2027 hospitality budget that survives being wrong
Our planning assumptions are deliberately cautious. Hourly pay +3.9%. Payroll including NI +4.5% to 5%. Food +4% to 5%. Drinks before duty +3% to 4%. Energy on renewal +15% to 25%. Business rates +3.5%. Spend per head +3% to 4%. Covers flat to -2%.
| 2027 assumption | Change |
|---|---|
| Wages | +4.5% to 5% |
| Food | +4% to 5% |
| Drinks before duty | +3% to 4% |
| Energy on renewal | +15% to 25% |
| Business rates | +3.5% |
| Spend per head | +3% to 4% |
| Covers | flat to -2% |
Build your base budget on those. Then run a downside with sales 3% lower and see what breaks. Stress your banking covenants against a 4.25% Bank Rate - if you've got bank debt, expect at least another half a percent.
And show next year's changes clearly as drivers, so when something moves you can see exactly which one it was.
The one thing to decide before Christmas
Decide your April 2027 price and labour plan now.
One considered price rise, landed with the April wage rise. Every dish re-costed, rotas rebuilt. Not three small rises chasing costs all year.
November
Re-cost your top 20 dishes. Line by line, from current pack prices and yields. The free WS recipe costing calculator does the maths.
December
Set your April price list. Decide whether one well-told rise or a few quiet ones suits your guests better - then commit.
January
Rebuild rotas at £13.21. Plan labour on sales per labour hour, not on finding cheaper hours.
February
Fix energy and supplier prices. Know your renewal date and target price, and never roll onto variable. Alcohol duty rises on the 1st.
March
Brief your teams and your guests.
1 April
Price and wage rise land together.
And three things to watch every single week. Labour % against plan every Monday, by site, corrected mid-week. Your energy contract date. And 13-week cash, because January to March brings VAT, quarter-day rent and quiet trade all at once.
Ten calls for 2027, to mark next October
Having marked last year's, here are ten more to hold us to next October. Write your own down too - it's the fastest way to get better at forecasting and running your P&L.
- 1
A VAT cut is if, not when. Budget without it.
- 2
Energy is the new wage shock. Contract dates become a hard, board-level item.
- 3
Rates split the sector. Pubs gain, restaurants and hotels pay.
- 4
Price rises move to April.
- 5
Smaller, better-paid teams. Sales per labour hour becomes the KPI.
- 6
Menus shrink and specs tighten. Fewer lines, more margin per plate and per drink.
- 7
Distressed M&A picks up. Bigger groups are already offering badly run sites to smaller operators, some fully kitted out for free. Keep opportunity capital ready.
- 8
Visitor levies reach big cities. I'd say 60% to 70% adoption within twelve months. Hotels and short stays feel it first.
- 9
Lenders want weekly data. More banks are asking for live links to sales data - and oddly, it's at the smaller end.
- 10
AI takes over the back office. Rotas, forecasts and invoices first. Adoption has been slower than I expected, especially workforce management.
Budgeting is a weekly discipline, not an annual task. The best budgets get torn up and rebuilt, and the operators who review weekly outperform the ones who don't.
Make it a habit, not a once-a-year moment.
Your questions from the floor
The best bit of these sessions is always the questions. Here's what you asked and what the panel said - no names from the floor, Chatham House and all.
"If I'm a small independent who doesn't qualify for small business relief, are closures going to rise?"
Probably, yes. But the panel was clear that hospitality is Darwinian, and that's not all bad. The net rate of openings and closures is still roughly level - new operators with new models keep replacing old ones.
Jack's view was that this Budget won't drive many closures on its own. The real pain is the energy, food and drink costs that drip in over the six to nine months after April, which is why you end up going back to your menu prices again and again.
The question to ask yourself: if you were opening today with a blank sheet of paper, what would you do differently - and how do you get from here to there?
"Couldn't VAT have been cut just for smaller businesses, say under £25m turnover?"
Unlikely. Government has been vocal about not adding to the compliance burden, and HMRC can barely cope with what it has now - Making Tax Digital cut inspections rather than improving compliance.
There's a fair point underneath the question though. Hospitality's lobbying voice mostly comes from the biggest businesses, while it's the ones under £25m that need the help most.
"If government is kicking the can down the road, what happens to interest rates?"
They're going up - but mostly because the UK tends to follow the US, and inflation here is still high on the back of energy. One bright spot: the gilt markets improved straight after the Budget, which matters for anyone with a mortgage or borrowing priced off them.
"Is there a point where guests just won't pay any more?"
Operators have soaked up a lot of cost to protect the top line, and there will be a limit. But the panel's view was that most of us aren't scientific enough about pricing yet.
Too many menus just add 25p or 50p to everything until every main is £16 and the whole thing feels expensive. Compare that to a proper price ladder - one high street menu had mains from £12 to £26. Jack's average spend is about £14, but £21 to £22 premium pizzas on the menu anchor the £16 to £18 ones and let him keep the margherita at £11. The big pub companies already do price bands and dynamic pricing. Most independents don't.
And Jack's reminder: great food and great service still drive the top line. Don't get so lost in cutting costs and passing them on that you forget it.
"I've brought my costs down but kept my prices where they are. Should I feel guilty for not passing it on?"
Tom's answer was no. Margin isn't something to feel guilty about if you're delivering value - and independents need reserves, because they don't have the bank facilities the big groups lean on.
Guests are gravitating to value, not price. People choose an independent because they like it and have a good time there. They choose a chain because it's predictable. Both have a place.
"By paying my team more, am I adding to wage inflation?"
Not in any way that moves the dial. But the squeeze is real. As the minimum rises, the gap between a team member and a supervisor keeps closing - and if the step up is minimum wage plus 5%, why would anyone take on the responsibility? At the other end, skills in short supply are pulling away, with night bakers getting 20% to 30% rises.
Keep management roles meaningful, so people can see where they're progressing to. And watch this space - there's a push for pay rates to be published openly.
"Should I wait and line all my energy contracts up on one end date?"
It's tempting, and some brokers will help you do exactly that. But with prices this volatile, Tom's view for groups is to hedge rather than tidy. Stagger contract lengths across your sites - ten months on some, fifteen or eighteen on others - so you're never fully exposed to one spike and you take the average. Some operators are going further and buying a basket of capacity ahead, so the shocks reach them later.
"Are bloated head offices going to shrink?"
They already are. Most profitable operators Tom works with run lean head offices, with a small team doing more and fractional specialists alongside them. The middle layer of area managers passing messages between head office and sites is on its way out, with GMs getting more ownership - and more pay for more responsibility.
One word of warning from the floor though. If HR is in on Tuesday, finance on Wednesday and marketing on Thursday, you lose the thread. Get the balance right.
"If you opened a venue today, what would be different in your tech stack?"
Not much in what's in it - but the quality is completely different. The win isn't on the floor, it's in the back office. Fridge temperatures logged automatically with an alert on exceptions. Delivery notes, invoices, stocktakes. Ten minutes here and there adds up, and nobody went into hospitality to sit in a windowless office on a laptop.