by Thousands of bars, restaurants and pubs across the UK are lowering their shutters for the last time as runaway ground rents, produce costs and no-show bookings continue to hit the industry.
There were more than 10 closures each day, according to industry data, which revealed the number of licensed premises in Britain fell 3.6 per cent from 103,682 to 99,916 in the year to September.
This is the first time the total has fallen below 100,000, according to the latest figures from AlixPartners and CGA/NielsenIQ.
The hospitality industry says it is crumbling under the combined pressures of skyrocketing energy, rent and food bills, staff shortages and no-show bookings, amid the ongoing cost of living crisis and Covid fallout. and Brexit.
Celebrity chef and restaurateur Tom Kerridge said The independent The hospitality sector is facing “a number of huge problems”, with its business having lost more than £1m since Covid hit.
Following Brexit, the TV chef said food inflation and staffing have been major issues, and staff shortages have pushed labor costs to unaffordable levels. However, he said, “the biggest pressure, what has pushed people over the edge, is the cost of energy.”
Kerridge’s flagship restaurant The Hand & Flowers in Marlow, which is the only pub in the UK with two Michelin stars, received a 700 per cent rise in its utility bills last year, he said.
These tensions have had a “huge effect” on his business, which includes seven restaurants and pubs. He has lost more than £1 million since the start of the pandemic, she said, plus double that in accounting losses which he is currently trying to recover.
Martin McTague, national chairman of the Federation of Small Businesses (FSB), said: “Rising rents and input costs, together with inflation, high energy prices and low consumer demand, have has been eroding the hotel industry, to the point that more than half of the small businesses in the sector are experiencing a drop in income, as well as plummeting confidence levels. “Soaring employment costs due to labor shortages, increases in the national living wage and upcoming changes to pensions legislation are adding to the burden.”
Among the main sectors, the hotel sector had the lowest level of confidence, with -31.1 points for accommodation and catering activities, the FSB small business index for the third quarter of 2023 shows.
The organization’s research further shows that more than half (56 percent) of small hospitality businesses have faced a significant increase in their operating costs (of more than 10 percent) in the last year.
Kerridge believes most restaurants, bars and pubs are simply hoping to break even by the end of the year, and warns that many independent venues will soon be forced to close. “It’s absolutely suffocating us,” she said. “The industry needs help and quickly.”
On the same day last week, two high-profile restaurants announced they were closing their doors due to overwhelming costs.
Simon Rimmer, 60, Channel 4 co-presenter. Sunday brunchHe called last Tuesday a “heartbreaking day” as he confirmed the closure of his vegetarian restaurant Greens in West Didsbury, Manchester, 33 years after he opened it with his friend Simon Connolly.
He posted a video on Twitter/X, explaining that an increase in rent of around 35 percent, as well as the rising costs of raw materials, heating, light, energy, employment of people and food in general , had made the business unviable.
Tony Rodd, who was a Chef finalist in 2015, described how “devastated” and “heartbroken” he and his team are as he similarly announced the closure of his Copper & Ink restaurant in Blackheath, London, on January 2.
In a video posted to Twitter/X, Rodd also predicted the closure of many more independent restaurants in the near future, as the hospitality industry buckles under the combined stresses of Covid, Brexit, the cost of living crisis and rising bills. of energy.
Jane Pendlebury, chief executive of the Hospitality Professionals Association (Hospa), described the closure of numerous hospitality businesses across the UK as “really disheartening”, attributing the situation to the continued financial strain the hospital is under. industry.
She said: “Sudden food price increases, rising energy costs and the inability to recruit suitable staff are common features of today’s hospitality landscape and are unfortunately forcing business owners to close their businesses. doors forever. The current cost of living crisis in the UK only magnifies these issues, making it increasingly difficult for businesses to remain viable, while also having a huge impact on consumer spending habits. “What complicates matters further is the significant impacts that no-shows have on bookings, posing a substantial challenge for hospitality businesses.”
A House of Commons Library investigation commissioned by the Liberal Democrats revealed in December that almost 5,000 more retail and hospitality businesses closed compared to those that opened during the first nine months of the year.
Sarah Olney, the party’s business and Treasury spokesperson, warned that the UK’s once bustling high streets are becoming “ghost towns”.
She said The independent: “Too many pubs, restaurants and cafes are closing their doors for the last time due to sky-high energy bills, borrowing costs and staff shortages. Our high streets are turning into ghost towns because this Conservative government won’t listen to their concerns.
“Rather than risk more hotel closures, ministers should give small businesses the boost they need by reforming business rates; address skills shortages and help businesses trade internationally by reducing bureaucracy and paperwork.”
Kerridge criticized the government for prioritizing the wrong areas and channeling wasted money into “ridiculous” projects, meanwhile industries such as hospitality are being “drained” and “left behind”. Calling on the government to halve VAT rates from the current 20 per cent, she said: “That 10 per cent [reduction would be a] Huge difference for businesses: that’s the difference between surviving and staying open, or closing. “It’s a release of pressure.”
Pendlebury said Hospa supports UKHospitality’s call for a VAT cut to help the industry keep prices low and recover. She urged an extension of the government-imposed business rates relief, which she said could help avoid a 7 per cent rise in bills in March. She also advised business owners to maximize the use of technology for greater automation.
McTague is calling on the government to look at the costs of employment as a whole and help small employers through policies such as increases in employment benefit, as well as raising the VAT threshold to £100,000.
A government spokesperson said: “In the autumn statement, the chancellor announced more than £4bn of support for small businesses and the hospitality sector, including 75 per cent business rates relief and a tax freeze. about alcohol.
“In 2021 we published the UK’s first hospitality strategy to improve the sector’s resilience and established a hospitality sector council to oversee its delivery. “We are working closely with the industry to address the challenges they face and will continue to help them grow and prosper in their local communities.”
They added that the small business multiplier will be frozen at 49.9p for the fourth year in a row.
