Budget 2025: What operators need to know & how to protect margin in 2026
The 2025 Autumn Budget has landed, and for hospitality, the picture is mixed.
Operators have been waiting for clarity. Now we have it: long-term business-rates reform from 2026, rising wage costs, and continued pressure from frozen tax thresholds. But no immediate relief on the cost lines that matter most today.
This isn’t a moment for panic. It’s a moment for planning. Here’s what the changes mean, and how operators can protect margin in the year ahead.
The 2025 Budget in under 60 seconds
Here’s the short version of what was announced:
- Minimum wage will rise again in April 2026 (4.1% for 21+, 8.5% for 18–20s, 6% for under-18s).
- Income tax and NI thresholds remain frozen, meaning labour becomes more expensive as wages rise.Business-rates multipliers for retail, hospitality and leisure will be permanently lowered from 2026 — a long-term win, not a short-term one.
- VAT remains unchanged, and no sector-specific relief was introduced.
- No new support was announced to ease CoGS, energy or inflationary pressures.
That’s the landscape operators are navigating today.
What this means for operators
Before we break down the detail, here’s how Conor Sheridan, Founder & CEO of Nory, summed up the immediate impact:
“Today’s Budget gives hospitality clarity on the future, but not relief in the present. Wage costs are rising again, frozen tax thresholds push labour even higher, and operators will feel that pressure immediately in their P&L.
Long-term changes to business rates are welcome, but the reality is that many venues still won’t see relief that reflects their actual profitability. A one-size-fits-all approach risks penalising businesses already operating on thin margins.
The next year is going to demand discipline — consistent deployment, tighter cost control, and stronger forecasting. The teams who stay close to their numbers and act early will be the ones who stay resilient.”
This Budget offers long-term structural progress, but operators still face a challenging twelve months. Below, we break down what the changes mean across labour, CoGS, cashflow and demand — and where the biggest risks and opportunities.
1. Labour costs will keep climbing
The upcoming wage increases, especially the sharp jump for 18–20 year olds - directly hit hospitality’s workforce mix. And because tax thresholds remain frozen, every increase in pay carries more employer NI.
Labour becomes more expensive without any operational relief in the short term. Productivity and scheduling discipline matter more than ever.
2. No relief on CoGS or supply chain pressure
The Budget didn’t touch any of the pressures driving food and drink costs. Supplier uplifts, inflation, alcohol duty and product taxes continue to squeeze GP.
For many operators, the biggest opportunity now is in reducing waste, tightening prep, and simplifying menus, not waiting for external support.
3. Business rates help — later, not now
The permanent lower multiplier from 2026 is the positive story. But many operators still face reduced relief today, with no immediate offset for rising costs elsewhere.
This creates a difficult transition period where costs rise in 2025 before rates fall in 2026.
4. Consumer confidence remains fragile
Frozen thresholds also affect consumers. Guests keep less of their income despite wage increases, meaning more cautious spending and lower average check values.
Operators must prepare for softer midweek trade and increased price sensitivity.
The operator playbook: What to do now
This Budget doesn’t offer quick fixes, but operators can take control in the areas that matter most.
1. Forecast demand more accurately
Align labour to real trading patterns. Factor in events, weather and historic performance so shifts reflect true demand, not habit.
2. Tighten CoGS control
Stay close to stock levels, waste and shrinkage. Remove low-contribution items and simplify where possible.
3. Improve productivity site by site
Use data to deploy labour where it makes the biggest difference. Build consistent service blocks and briefings so every hour contributes to revenue.
4. Strengthen your profitability strategy
Understand margin breakdown at a glance. Identify underperforming sites early.
Benchmark performance so you know whether issues are internal or market-driven.
How Nory helps operators respond
This Budget makes one thing clear: you can't manage what you can't see. Operators who come out stronger in 2026 will be the ones who act now, tightening labour costs, reducing waste and knowing exactly where their margin is going before it's gone.
That's what Nory's built for:
- Know your labour costs before they hit you: forecast demand and schedule the right hours with the right team
- Spot waste in real time, not at month-end when it's too late to fix.
- See your P&L now, not tomorrow - data refreshes every 15 minutes, so you're making decisions while you can still change the outcome.
- One platform. Full visibility. AI doing the heavy lifting -> built with operators, for operators.
If you want to stress-test your numbers or see how Nory could protect your margins heading into 2026, we're here.