New research shows the day-to-day cost of running small and medium-sized businesses has outpaced consumer inflation by 11.75%, with hospitality businesses bearing the brunt of the pressure.
Hospitality businesses have experienced the sharpest rise in operating costs of any UK sector over the past decade, according to new research from payments provider Dojo.
The study, which analysed ten core cost categories between 2015 and 2025, found that SME business costs have risen faster than consumer prices, creating an “inflation gap” of 11.75%.
By breaking down costs across areas including energy, labour and supplies, the research highlights how inflation has affected industries unevenly, with hospitality emerging as the most exposed due to its complex cost structures.
Catering businesses hit hardest
Among hospitality segments, catering companies have seen the biggest increases, with operating costs rising by 62% on average over the past decade.
Unlike traditional restaurants, caterers must also account for transport costs for each job. These logistics expenses alone have climbed by 57%, adding further pressure to already stretched margins.
At the same time, materials and supplies costs for catering businesses have surged by 113% — the highest increase recorded across all sectors analysed — reflecting ongoing volatility in food prices and supply chains.
Hotels and pubs face rising tech and payment costs
Hotels have also seen significant increases, particularly in payment processing costs, which have risen by 83% over the period.
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For pubs and bars, the steepest rise has come from technology and software, with costs jumping by 167%. The findings point to a growing reliance on digital systems and automation across hospitality operations over the past decade.
Across all three segments — catering, hotels, and pubs and bars — increases were recorded in every cost category measured, including rent and business rates, energy, labour, insurance, and training.
‘Control and efficiency’ key to managing costs
Charlie Ashworth, head of research & insights at Dojo, said: “While operating costs have risen significantly over the past decade, with the right insight into their cost structure, businesses can be better equipped to respond to these pressures.
“For business owners, the opportunity lies in control and efficiency. With labour, energy, insurance and technology costs all contributing to long-term structural change, understanding where your exposure sits is now a strategic advantage. Reviewing supplier contracts, improving operational efficiency, reducing unnecessary overheads, and optimising payment systems can all help protect margins in a higher-cost environment.
“With increases of this scale, businesses must take a more strategic approach to operations and managing their supplies. Understanding the supply chain is critical, and business owners should really look into how much they pay per item and whether there are more competitive suppliers available without compromising quality. Another option is to investigate how usage can be reduced, or processes improved to minimise waste. In times of sustained inflation, careful supply management can make a meaningful difference to overall profitability.
“Businesses that regularly assess their operating model, adapt pricing strategies where possible, and invest in tools that streamline transactions and reduce friction are often better positioned to absorb cost pressures without compromising service or growth.
“The past decade shows that the cost of running a business has evolved. The next decade will reward those who evolve with it.”
The findings underline the mounting financial pressure facing hospitality operators, as rising costs across multiple fronts continue to reshape the sector’s economic landscape.
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