UK Economy Beats Expectations – What This Means for You

The Office for National Statistics (ONS) announced today that the UK economy grew by 0.7% in the first quarter of 2025 – exceeding forecasts of 0.6%. The majority of this growth was driven by the services sector, which includes hospitality.


While this is welcome news, the optimism must be tempered. The figures precede recent tax rises for employers and new US import tariffs, and analysts warn the strong pace of growth is unlikely to last.


So, what does this mean for restaurant and café owners? Here’s a breakdown of the implications – and practical steps you can take to keep your business thriving in what remains a difficult and unpredictable market.


1. Leverage Short-Term Consumer Confidence


Economic growth often leads to a short-term boost in consumer spending. Now is the time to capitalise on it.


What to do:


  • Promote midweek offers or limited-time menus to encourage visits beyond the weekend peak.

  • Upsell effectively – train staff to suggest sides, drinks, or desserts that increase average spend without appearing pushy.

  • Use this period to test price elasticity – a small increase in menu pricing may go unnoticed if demand remains strong.


2. Protect Margins Ahead of Employer Cost Increases


From April, employer National Insurance contributions and minimum wage levels increased – tightening margins for many in hospitality.


What to do:


  • Review your rota against demand data (POS reports, reservation patterns) and cut overstaffing during low footfall periods.

  • Conduct a supplier cost audit – consolidate purchasing or renegotiate pricing now, especially for non-perishables and dry goods.

  • If using delivery platforms, assess whether raising prices exclusively on those apps could offset commission costs without alienating in-house diners.


3. Stay Vigilant on External Cost Pressures


The US has imposed tariffs on UK exports, and although indirect, these kinds of moves add strain to the wider economy. Expect input cost pressures in areas like packaging, imported ingredients, or equipment.


What to do:


  • Switch to local suppliers where possible – it strengthens your supply chain and plays well with customers who value sustainability.

  • Check your insurance and service contracts – are you overpaying on legacy agreements that could be renegotiated or cancelled?


4. Refocus on Profit, Not Just Revenue


Growth periods tempt many businesses to chase sales at any cost. But in this economic climate, profit must take precedence.


What to do:


  • Use your accounting software (or ask us to help) to calculate your gross profit by menu item – cut what’s dragging you down.

  • Identify your top 3 revenue drivers (e.g. takeaway coffee, set lunch, Friday dinner service) and invest marketing spend only where there’s clear ROI.


5. Plan for Slowdowns – Not Just Surges


The Q1 figures are encouraging, but don’t bank on the trend continuing. Analysts already expect a slowdown. Preparing now means you won’t have to make drastic cuts later.


What to do:


  • Create a 12-week rolling cash flow forecast, updated weekly. This gives you real-time visibility and helps spot issues early.

  • Set up a reserve fund (even £500/month into a savings account) to cushion against quieter months or emergency costs.


Final Thoughts


While the growth news is positive, the smart move for restaurants is cautious optimism paired with solid planning. We’ve seen too many operators expand too quickly on the back of good news, only to be caught short by the next downturn.

Restaurants, cafes, and takeaways can benefit greatly from working with a specialist accountant. If you hadn’t noticed already, we are specialist accountants in Leeds for food service businesses, so unlike most accountants, we have years of experience working with businesses just like you. If you're interested in finding out more about how we can help your restaurant become more profitable,  book a call with one of our accounting experts.