How the Iran Conflict Is Impacting UK Hospitality Businesses — And What You Can Do About It

The start of 2026 looked promising for UK hospitality. Consumer confidence was edging upward, interest rates were forecast to fall, and a summer of sport promised a surge in tourism spending. Then, on 28 February 2026, conflict broke out in Iran — and the landscape shifted overnight.

For restaurant, pub, bar, café, and hotel owners across the UK, the ripple effects are already being felt. Here's what you need to know, and — more importantly — what you can do about it.

1. Food Supply Disruptions and Rising Ingredient Costs

Iran's near-total blockade of the Strait of Hormuz has brought shipping in the region to a near standstill. Shipping costs have spiked by over 144% in recent weeks, and the knock-on effect on food supply chains is significant.

Fresh fruit and vegetables are among the most immediately affected categories. Around a third of the UK's fresh produce is grown in greenhouses, where energy accounts for roughly a quarter of production costs. With energy prices surging, expect those costs to pass through to your suppliers — and then to you.

Imported ingredients from Italy, Germany, and other European countries that rely heavily on gas imports are also under pressure. Freight prices are rising daily.

What you can do:

• Engage your suppliers now and explore UK or local sourcing alternatives
• Consider fixing prices on high-risk ingredients where possible
• Involve suppliers in menu development to build more resilient, cost-effective dishes
• Consolidate deliveries to reduce logistics costs

2. Soaring Energy Bills

Energy costs are one of the most acute pressure points. Heating oil prices have reportedly quadrupled for some rural, off-grid operators since the conflict began. Even on-grid businesses face steep increases when energy contracts come up for renewal at the end of the quarter.

What you can do:

• Contact your energy supplier immediately to discuss hedging options
• Review your energy contracts before they auto-renew
• Explore energy efficiency measures to reduce consumption
• If you're off-grid, lobby your local MP for targeted government support — this is exactly the kind of issue we at FD OD are actively raising with policymakers

3. Weakening Consumer Confidence

Rising global tensions are pushing up interest rates and dampening consumer confidence — just as it was starting to recover. The negative press alone is having a chilling effect on spending, even before price rises hit menus.

For hospitality businesses, this means customers may trade down, visit less frequently, or cut discretionary spending. The summer tourism boost that many operators were banking on could be reduced if international travel concerns persist.

The silver lining: UK domestic tourism may actually increase this summer as consumers choose staycations over international travel. If you're in a tourist-friendly area of Surrey, Hampshire, or beyond, this could be an opportunity worth capitalising on.

What you can do:

• Offer value-led promotions to maintain footfall without sacrificing margin
• Lean into local and domestic tourism marketing
• Review your pricing strategy — small, incremental increases are better absorbed than sudden jumps

4. Margin Pressure Is Intensifying

\n Hospitality margins were already under pressure before this conflict. Now, with food costs, energy bills, labour costs, and the new business rates all rising simultaneously, the squeeze is real.

\n At FD OD, we work with restaurant, pub, café, and hotel owners every day who are surprised to discover their true margins are lower than they thought. In this environment, understanding your numbers isn't optional — it's survival.

Key metrics every hospitality operator should be tracking right now:

• Gross margin % — are your menu prices keeping pace with ingredient costs?
• Labour % — is your rota optimised for current trading patterns?
• EBITDA % — what's your true profitability after all costs?
• Break-even point — do you know exactly what revenue you need to cover costs?
• Free cash flow — do you have a buffer for the months ahead?

5. What FD OD Can Do for Your Business

This is exactly the kind of environment where having a Finance Director in your corner makes the difference between surviving and thriving. At FD OD, we specialise exclusively in hospitality — restaurants, pubs, bars, cafés, hotels, and more — and we bring deep industry experience without the corporate price tag.

We can help you:

• Conduct a rapid margin and cost review
• Identify where you're losing money and fix it fast
• Build a financial plan that accounts for current uncertainty
• Explain your numbers in plain English — no jargon, no confusion

We can onboard new clients within 48 hours. If you're feeling the pressure right now, don't wait.

FD OD provides on-demand Finance Director services exclusively for the hospitality and leisure industry. Based in Surrey and Hampshire, we work with clients across the UK and internationally.