In the context of the UK government's target of 50% participation by young people in higher education, issues relating to the use of graduates in firms assume renewed significance. Increasing attention is paid to the potential for small and medium-sized enterprises (SMEs) to absorb a larger number of new graduates. With reference to the hospitality sector, this paper analyses survey data on the employment and use of graduates by SMEs. Data are presented on two specific themes: first, the characteristics of firms employing graduates and, second, owner-managers' perceptions of graduate labour and its use. The authors raise questions about the extent to which the skills of graduates employed in hospitality SMEs are being used.