What the Autumn Budget means for the catering and foodservice sector
Autumn Budget 2025 – key tax & economic measures
The Chancellor’s Autumn Budget includes a series of changes likely to impact allmanhall’s client partners and their wider supply chains, particularly in education, care, and hospitality.
According to Oliver Hall, allmanhall’s co-owner and Managing Director:
“It seems that we have another tax and spend budget that will see employers further squeezed. This will lead to an increase in prices as costs are passed on, at a time when confidence and spending power have already been significantly eroded.”
Your wage bill will rise – as will those of your suppliers and contractors
Among the most immediate developments is an increase in statutory minimum wages from April 2026, which will directly affect many low-paid roles across foodservice, catering, cleaning, and support services:
- National Living Wage (ages 21+): rising to £12.71/hour (from £12.21)
- Ages 18–20: rising to £10.85/hour (from £10.00)
- Ages 16–17: rising to £8.00/hour (from £7.55)
- Apprentice rate: also rising to £8.00/hour (from £7.55)
This will benefit many low-income workers in care homes, catering teams, and hospitality venues, but it also introduces new cost pressures for employers in those sectors, many of whom are already facing tight budgets and staffing challenges.
This impacts contract caterers and in-house teams alike – outsourcing employment simply outsources, rather than solves, the challenge.
In addition to wage increases, the Autumn Budget introduces or extends a range of financial and tax measures:
- The freeze on income-tax thresholds is now set to remain in place until April 2031 – a full three years longer than many had expected – increasing effective tax burdens as wages rise.
- Lower growth is forecast, with real GDP expected to average 1.5%, slower than previously projected.
- Tax as a share of GDP is set to reach a historic high of 38% by 2030–31
The milkshake tax
The government will extend the existing Soft Drinks Industry Levy (SDIL) to include prepackaged milk-based drinks, such as bottled milkshakes, flavoured milk and sugary milk-substitute drinks.
The sugar threshold at which the levy applies is also being lowered: drinks containing 4.5 g of sugar per 100 ml or more will now be taxed – down from the previous 5 g per 100 ml for soft drinks.
The changes come into effect from January 2028, giving manufacturers a lead-in period to reformulate recipes. The policy is part of a broader public health drive to reduce sugar consumption and tackle obesity, especially among children.
It’s also an economic measure: the government estimates the expanded levy could raise around £45 million annually once fully implemented
While ‘open-cup’ milkshakes and drinks freshly prepared in cafés, restaurants or bars remain exempt, most supermarket- and wholesale-sold prepackaged milk based drinks will be affected.
What this means for the catering and foodservice sector
Alongside volatile food inflation which currently sits at 4.9%, the Autumn Budget creates a number of challenges for those managing catering budgets.
Pressure on household disposable income → potential cost-sensitivity
With income tax bands frozen, many households will see more of their income taxed, especially if wages rise. That may leave less disposable income for eating out, catering services, or hospitality – potentially depressing demand. For those clients whose customers are individuals/families, this could translate into ever tighter budgets. For households where sacrifices were already being made to pay for things such as education and care, this may further heighten price sensitivity and therefore anything providers can do to reduce price increases being passed on will likely be appreciated and well received. Making sure the pounds and pennies go as far as possible will be a mantra for all.
Wider monetary squeeze – impacting wage expectations, staffing, and procurement budgets
As tax burden rises and growth slows as a result of the Autumn Budget, public-sector and private-sector budgets (including in education, healthcare, care homes, hospitality) are likely to come under pressure. Organisations may aim to reduce overheads, which could increase demand for procurement expertise, cost control, and value for-money analysis. A wise move to make sure budgets are put to most effective use.
For foodservice operations, there may be greater hesitation on spending; menus and procurement may need to be optimised carefully to balance quality, nutrition (especially in sectors like care, education, healthcare) and cost. Where an acceptance of higher costs for ease or peace of mind may have previously been feasible, commercial scrutiny and ensuring your team have visibility and control may now be more necessary than ever.
Turning budget challenges into opportunity for your operation - how food procurement can help
In this challenging fiscal environment, many organisations will be re-evaluating their catering and foodservice operations to maintain quality while reducing costs and really getting to grips with money that doesn’t need to be spent. Asking is this the most efficient way? That’s where a specialist food procurement and foodservice consultancy can make a real difference – helping you respond strategically, not just reactively.
By consolidating suppliers, streamlining processes, and improving visibility over food spend, a well-managed procurement solution can unlock real savings. This isn’t just about cutting costs – it’s about making smarter decisions with the data you already have.
Whether it’s mitigating rising delivery costs, managing wage-related pressures, or navigating new taxes like the extended sugar levy, food procurement done well gives you:
- Greater control over food and catering budgets
- Support and resource for your team that doesn’t come with a heavy price tag
- Clear, actionable reporting to support informed decisions
- Time savings through simplified billing and supplier management
- Support in aligning food sourcing with health, nutrition, and sustainability goals.
Co-owner and Director, Jo Hall summarises this; “For anyone worried about the implications of the Autumn Budget and the anticipated price increases that will be felt as a squeeze across the foodservice sector, indeed in everyone’s wallets, there is help at hand. This is a time to look for support to enhance what your organisation is able to achieve, giving you value for money, reassurance that someone is negotiating your prices in the face of food inflation and, where possible, providing wrap-around expertise and services you may otherwise have to pay for.
In uncertain times, the right procurement partnership becomes a strategic asset – ensuring your operations remain resilient, compliant, and value-driven.