From pressure to progress: The state of restaurant HR in 2025 

Since the last UK Budget, the already-tough environment for restaurant HR professionals has become even more difficult. Profits are tight, pay rises aren’t stretching as far as they used to, and conversations about redundancies are coming up more frequently. 

In this blog, we take a closer look at the economic challenges impacting HR professionals in the restaurant industry. We also highlight the types of HR strategies they’re adopting to overcome these obstacles. So, let’s dive in… 

The insights below are drawn from What’s the Mood? HR’s Take on Business 2025 – a survey conducted by the HR Ninjas community, featuring responses from 490 UK-based HR professionals across diverse industries. 

In this blog

Key HR challenges facing the restaurant sector  

Adapting to a new reality 

Conclusion and key takeaways  

Key HR challenges facing the restaurant sector

From tighter budgets to rising turnover, restaurant HR professionals are navigating some of their toughest challenges yet – starting with the financial strain brought about by recent government budget changes. 

While some sectors, like retail, are turning to mechanisation to offset rising costs without cutting jobs, restaurants are having to get creative in different ways. With less scope to automate customer-facing roles, many restaurant HR professionals are turning to AI to improve workforce planning, reduce inefficiencies, and keep service standards high without overspending. 

Government budget changes are hitting hard

75% of HR professionals in the restaurant industry are feeling the pinch since Employer National Insurance contributions (NICs) increased and the new National Miniumum Wage (NMW) was introduced. 

In all honesty, this came as no surprise, because the restaurant industry runs on wafer-thin margins, so any increase in costs – be it from taxes, energy, or employer contributions – puts real pressure on how teams are staffed and paid.  

It’s forcing HR teams to rethink every part of the operation. How shifts are planned, how budgets are allocated, and how teams can stay motivated, even when resources are stretched. 

And while none of this is easy, what’s clear is that HR leaders are refusing to take a passive stance. They’re using data to make sharper decisions, test new shift models, and look for operational wins that don’t come at the expense of people. Because, if there’s one thing this sector knows how to do, it’s roll up its sleeves and keep the service going, even when the pressure is on. 

Redundancies are on the radar

Of course, it’s not just about budget changes squeezing the sector; it’s what those pressures are forcing HR teams to consider next. And in the case of the restaurant industry, 63% say they’re actively considering redundancies due to financial strain.  

But in a sector where people are the product – greeting guests, cooking meals, creating an atmosphere – that’s not a decision made lightly. Redundancies don’t just reduce headcount, they dent morale, disrupt service, and can undo years of team-building in a single blow. 

Which is why many HR teams are only considering redundancies as a final resort. The priority is leaning into data and workforce insights to plan smarter. To build a leaner, more adaptable model that flexes with demand, and keeps your best people in the business.

Employee turnover has increased  

But it’s not just the financial constraint of reducing headcount – the industry is also grappling with rising turnover. In fact, 38% of restaurant HR professionals say employee turnover has increased over the last 12 months. 

And let’s be honest, the cost of turnover adds up quickly. Every person who walks out the door takes hard-won knowledge and team cohesion with them. The recruitment and onboarding cycle starts again, shifts become tougher to fill, and the smooth service customers expect becomes harder to deliver. And unfortunately, in an industry powered by people, that kind of instability is expensive. 

Now, layer on the uncertainty of potential redundancies – even if they haven’t happened yet. For employees, this can all feel a little too shaky, leading some to jump ship before decisions are made. 

That’s why many HR teams are putting their energy into making people want to stay. They’re adopting stronger onboarding processes, advanced career mapping, and more flexible scheduling.

Adapting to a new reality

With all the economic challenges and governmental policy shifts, what strategies are restaurant HR professionals prioritising in the year ahead to balance both employee engagement and productivity?  

DEI initiatives are advancing

With more retention strategies at play, it was interesting to see DEI regarded as a high priority in the restaurant industry.  

It does make perfect sense. This industry is one of the most diverse out there. When inclusion is baked into the way teams are hired, managed, and developed, the thinking is that everyone benefits, from frontline employees to the guests they serve. 

In tough times, those values matter more than ever, helping to build the kind of loyalty and community that no pay rise alone can buy. 

AI-enabled HR is on the rise

Of all the findings, this might be the most forward-looking. 88% of restaurant HR professionals say they’re now embracing AI in HR. 

AI HR tools like ELLA are helping teams get smarter with their time. These tools automate workflows such as recruitment, rota building, and performance management. They also make advanced and enhanced data insights more accessible, supporting HR and people managers to make better decisions about when and where to deploy staff.  

AI is also taking over tedious tasks, such as sending employee contracts, uploading job descriptions, and answering employee queries. As a result, HR teams can focus on more strategic business value tasks.  

Sure, it’s an investment. But it’s one that’s already paying off in better planning, faster execution, and less firefighting. And, in a sector built on speed and service, that kind of support goes a long way. 

Conclusion: Restaurant HR professionals are showing resilience amidst economic adversity 

Overall, one thing is clear: what may appear on the surface as a survival story is actually one of resilience. The restaurant industry isn’t just keeping the lights on – it’s adapting with intent. 

From doubling down on DEI to adopting AI-enabled HR software, restaurant HR leaders are finding new ways to future-proof their organisations. They’re taking a strategic response to long-standing pressures, and will see success with the right tools to support their strategies.

Key takeaways

• 75% of restaurant HR professionals say they have been negatively impacted by government budget changes. 

• Redundancies are on the radar for 63% of restaurants. 

• Restaurants are responding to long-term pressures by doubling down on DEI initiatives and AI adoption.

“What’s the mood?” Read the full report 

Learn more about how restaurant HR professionals are navigating the challenges and opportunities of the year ahead.