Universities across the UK are undergoing a significant transformation in how they manage their catering operations, according to a new report from leading catering consultancy The Litmus Partnership.
Titled ‘Business Models in HE Catering – 2025 Update’, the report captures evolving trends and challenges within higher education catering, based on comprehensive survey data from institutions nationwide. The findings highlight the profound impact of financial pressures on catering services and the strategic responses universities are taking in response.
Among the most striking insights, 69% of universities report a catering deficit in 2025, which has increased from 56% in 2017. For some universities, the deficit sits at £500,000 or above. At the same time, the number of institutions operating at a surplus has dropped to zero, underlining the intensifying financial strain across the sector.
The majority of universities (83%) manage their catering internally, citing concerns over performance quality and contractual inflexibility for the reason for direct management.
Mark Kassapian, Managing Director at Litmus Retail, said: “Universities are navigating a deeply challenging commercial landscape. This doesn’t just impact budgets – it directly affects the student experience. In fact, over 63% of universities acknowledge that financial constraints are negatively impacting student wellbeing.
“Imagine a scale, with catering profitability on one end and student experience on the other. The closer you get to one, the further away you move from the other. Of course, it’s all about balancing the two. In an era where attracting and retaining student numbers is essential, the need for strategic cost management – balancing financial sustainability with high-quality services – is more critical than ever.”
Key insights from the report include:
- Rising deficits: The proportion of universities with a £250k–£500k deficit rose from 8.5% to 21.1% since 2017.
- Financial KPIs dominate: Four out of the top five Key Performance Indicators in HE catering are now finance-focused.
- Cost-saving initiatives: Common measures include reducing operating hours, closing outlets, and streamlining staffing models.
- Future trends: Forecasts highlight a continued focus on flexibility, digitisation, and greater integration with sustainability goals.
Mark Kassapian continued: “While the financial pressures are undeniable, the resilience and adaptability we’re seeing from institutions is inspiring. Many are implementing creative cost-saving initiatives such as repurposing underutilised bar spaces as social or study zones to boost engagement and revenue.
“We’re also seeing more independent operators running individual units, helping to reduce capital expenditure and headcount while offering authentic, locally tailored options.
“Technology is playing a growing role too – kiosks are boosting average spend and reducing staff costs, while online ordering and food delivery remain strong. The rise of dark kitchens and kitchen consolidation is helping universities centralise production and streamline resources.”
The report also reveals that 80% of universities have introduced new types of catering outlets to better meet student needs, with coffee shops and cafés the most common additions.
Mark Kassapian concluded: “As universities continue to adapt in an unpredictable financial climate, this report offers essential benchmarking and strategic insight to help decision-makers future-proof their catering provision.”
The ‘Business Models in HE Catering – 2025 Update’ report follows Litmus’ inaugural university report conducted in collaboration with The University Caterers Organisation (TUCO) in 2017.