Times are hard in the hospitality industry. There are many external factors which are making trading difficult, leading to some businesses closing their doors for good. Frederick Szydlowski, Co-founder of Embargo, discusses how technology is steadily reshaping the hospitality landscape and how small businesses are embracing the change.
The UK hospitality industry is struggling with more challenges than ever – staffing shortages, rising costs and customers that are getting more price conscious. Venues across the country are struggling to fill roles while wages, rent and supply prices climb higher each month – and raising prices further tests already strained customer patience.
At the same time, customer spending still hasn’t bounced back to pre-pandemic levels, and recent global pressures (looming tariffs, risk of recession, high borrowing costs) are driving up the cost of essentials like coffee while tightening purse strings everywhere.
Unfortunately, these pressures aren’t going away anytime soon, and they’re largely out of any one business’s control. But that doesn’t mean the industry should do nothing in the hope these challenges will subside; being passive, as a sector and as individual businesses, is dangerous.
In fact, positively, there’s a smart way forward: one that helps venues adapt, stay competitive and thrive in spite of it all.
Tech adoption
Technology is steadily reshaping the hospitality landscape, and small businesses are embracing the change. From advanced POS systems to CRM platforms and digital loyalty apps, independent venues are adopting new tools to streamline operations and improve customer engagement.
At Embargo, we work with nearly 2,500 food and drinks SMEs. On the one hand, we see what a huge difference technology (and better customer data) can make. But equally, we see that adopting technology is not always an easy task for businesses that are tight on time, money and, sometimes, digital skills.
What’s more, while these systems are useful, they often only go so far.
Since the pandemic accelerated digital adoption, hospitality businesses have gained access to a wealth of data, spanning sales trends, visit frequency, customer preferences and more. Yet for many SMEs, this data remains largely untapped. Time constraints and limited analytical resources mean that most managers rely on simple metrics like customer count or average spend, meaning they are missing out on the deeper insights that could drive growth and efficiency much further.
The true value lies in understanding complex patterns: how time of day, different types of offers or even weather conditions influence customer behaviour and purchasing decisions. This level of analysis can inform everything from staffing and inventory to targeted marketing and loyalty strategies. We know from experience that repeat purchases and high spending customers are the key to revenue growth – and Artificial Intelligence (AI) can easily identify what makes customers spend more often and higher, as long as it has sufficient high-quality data.
AI offers a way to unlock value by transforming raw data into actionable insights and direct engagement with customers, with minimal effort. But for small hospitality businesses, building their own AI models and engines is almost certainly out of reach. The fact remains that it’s costly and complex; proprietary tools are therefore the reserve of large enterprises.
Bridging that gap is the next step in helping independent venues compete and thrive in a rapidly evolving market. We see a huge need to address this – there is a revolution coming. SMEs are the backbone of the entire hospitality industry and they must have access to cutting-edge, yet simple-to-use, technology.
Next generation will bring much-needed digital skills
There’s also a generational shift happening, with the next wave of hospitality workers entering the industry with a completely different mindset. They’ve grown up with technology, and many are already using AI in their daily lives. In fact, over 90% of UK university students now rely on AI tools for their schoolwork, so stepping into a workplace that doesn’t use smart tech can feel like stepping back in time.
New hires today are tech-savvy and comfortable with automation, data platforms and digital systems. The same goes for customers. They’re used to seamless, personalised experiences, whether they’re ordering coffee or receiving offers. For them, AI won’t be a novelty but a baseline expectation.
If the sector wants to attract top talent and meet modern customer expectations, embracing AI will become a powerful advantage.
AI isn’t easy, but that’s where plug and play technology providers come in
Despite its potential, implementing AI in hospitality isn’t simple. It’s not just ‘flipping a switch’. It requires the right data, robust infrastructure, continuous model training and operational scale – elements that are far beyond the reach of independent venues.
That’s why small businesses can’t be expected to build AI solutions on their own. They don’t have the time, resources or technical expertise to develop, test and maintain this kind of technology in-house.
This is where established, data-rich providers that already have a significant customer base and first-party data will play a vital role. With years of experience supporting SMEs and a platform already integrated into the day-to-day operations of hospitality venues, with all the building blocks in place: structured data, user engagement and industry insight – we have learnt at Embargo how powerful AI can be if implemented correctly. Now, backed by the UK Smart Grant, we will be leveraging these strengths to make AI practical and accessible for businesses that need it most and we strongly believe this will become a norm for tech providers in the future, as well as for SMEs.
AI should not be a luxury reserved for enterprise chains. Independent venues deserve access to the same tools, insights and automation that larger players use to thrive.
With solutions like AI-driven CRM platforms, small- and medium-sized hospitality businesses can finally level the playing field, unlocking the full potential of their data and driving smarter, more sustainable growth.
The industry is ready. The workforce is ready. The data is ready.
Now’s the time to act.
