A friendly barista smiles while handing a tray with a coffee and croissant to a customer at a modern café counter. Muffins are displayed beside a chalkboard menu, and wine glasses hang above the counter.

6 Strategies To Offest Rising Hospitality Costs

1: STOP HIDDEN FEES IN THEIR TRACKS

Many businesses are aware of their headline payment rates but fail to spot the hidden fees on their monthly statements. An additional surcharge of up to 1% + 13p for accepting non-UK issued cards and monthly terminal maintenance fees can have a significant impact on your bottom line. In these times when hospitality businesses are tightening their belts, those charges can quickly add up.

SOLUTION

Review your payment solutions and look more closely at all fees appearing on your processing statements. Better yet, switch to a payment partner with transparent pricing.

25% is the average annual cost saving we’ve been able to offer our customers who were previously paying excessive fees by leveraging our £4.5bn+ annual gateway volume to secure competitive rates.

2: INTERNATIONAL CUSTOMERS: GENERATE HIGHER SPEND & NEW INCOME

It’s more common than you think for hospitality businesses to say that they avoid acceptance of Discover Diners, American Express, or JCB due to the percieved high fees and the assumption that customers are happy to pay with their Visa or Mastercard instead.

SOLUTION

Most customers from developed countries have access to a Visa or Mastercard, however the loyalty or rewards they get from using their preferred card offer a perceived greater value to them. Unless your hospitality business is located near a major transport hub or city centre, you are likely to focus on attracting local customers. However, international tourists and corporate travellers often spend more generously according to our data insights. Failure to publicise and to accept these premium cards, which are familiar to both domestic and international customers, may result in missed additional revenue from customers who swerve your establishment in favour of those who clearly signpost their preferred card acceptance.

Additionally, you can generate a new revenue income stream by displaying the bill amount in both local currency and converted in the customer’s home currency. This allows the customer to lock-in the final converted price and your business gets the upside of the FX conversion known as Dynamic Currency Conversion (DCC).

An Italian restaurant chain with 10 locations realised the value of DCC with a projected annual revenue income of £200k. This is based on a conservative 15% expected conversion ratio of international customers opting to pay in their home currency.

3: UNLOCK NEXT-DAY CASH FLOW

Traditionally, banks relied on the Bacs payment system to settle batch funds, meaning merchants would not access their cash for at least 3 days and up to 28 days. Despite the UK banking system moving to a faster way of moving funds, some merchants feel frustrated by being stuck on these outdated and long settlement periods.

SOLUTION

With the introduction of the UK Faster Payment Service (FPS), funds of up to £1,000,000 can be transferred swiftly, meaning that businesses no longer have to wait days or weeks for their payments to clear. If your bank or payment provider isn’t offering you at least next-day settlement, it is time to make a change.

4: STREAMLINE RECONCILIATION

Whether you’re a small business juggling multiple responsibilities or a larger hospitality operation with endless tasks, reconciling payment funds can be time-consuming and tedious. Payment providers often net settle, stripping out their fees before settling the remainder, making it difficult to match sales reports with your actual revenue.

SOLUTION

Make life easier by requesting gross settlement of payment funds. While payment providers typically net settle by deducting fees upfront, asking for gross settlement means you’ll receive the full amount matching your revenue takings for that period. Any transaction charges will be collected as a separate process, usually via Direct Debit. This subtle change can save you or your team up to 4 hours of reconciliation time each week.

5: FIND A PAYMENT PARTNER, NOT A PROVIDER

It’s easy for a payment or EPOS provider to claim they have your best interests at heart, but how often have you tried reaching out to them, only to be met with unresponsive sales reps or lacklustre customer service? Support desks may answer your questions, but do they go the extra mile?

SOLUTION

Before signing up with a new supplier, don’t feel embarrassed to ask for a reference of a long standing customer who has experienced their after sales service.

A leading QSR brand partnered with FEP PAY to upgrade their payment setup. Through close collaboration the FEP PAY team:

Reviewed their payment statement, saving 28% in annual payment fees.
Worked with their incumbent POS provider to enable smooth integration.
Implemented offline payments, to eliminate trading interruption due to network outages.

6: BOOST REVENUE WITH SMARTER HARDWARE

Outdated hardware in the hospitality industry is holding businesses back from unlocking their full revenue potential. Traditional point-of-sale (POS) systems can slow down transactions, increase staffing costs, and limit upselling opportunities, especially in high-demand environments like quick-service restaurants (QSRs).

SOLUTION

Upgrade your hardware to improve both your customer experience and your bottom line. Our expert payment consultants can help you implement revenue-generating strategies through self-checkout kiosks and mobile point-of-sale (mPOS) solutions.

Self-checkout kiosks, already a staple in the QSR industry, give customers autonomy over their orders while reducing staffing costs. By integrating AI, these kiosks can also drive significant increases in Average Transaction Value (ATV) by suggesting complimentary items in real-time, such as meal deals or signature dishes.

mPOS systems allow for faster transactions by enabling staff to take payments wherever customers are – whether at the table, in the queue, or waiting for food.

THE BOTTOM LINE…

As we face the challenges of rising costs, it’s more important than ever for hospitality businesses to find innovative ways to protect their bottom line. We hope the strategies outlined in this report can help you reduce costs, increase revenue, and streamline your operations.