Ahead of the Spring Budget, bosses across the UK’s troubled hospitality sector are piling fresh pressure on Chancellor Jeremy Hunt to provide greater relief before “doing irreversible damage”.
Only two months into the new year and already a spate of hospitality and nightlife venues have been permanently closed due to customers spending less and red-hot supply costs.
Adam Handling, chef owner at Adam Handling Restaurant Group and operator of The Loch & the Tyne restaurant in Windsor told City A.M of the pressures his business is currently facing.
He said:“It’s a tough time for all operators at the moment, across the industry. I try to stay positive, adapt and overcome.
“We’ve made changes in making our menus bigger and introducing a set-price lunch menu.”
He added: “I think we need to use this opportunity to be innovative with food, to make sure that zero waste is more of a focal point on our bar menus so we can keep pricing the same but make more revenue from products that would usually get discarded.”
One of the biggest blows dealt to the wider hospitality industry was the closure of 17 Rekom night club sites and over 400 jobs as part of its pre-pack administration.
It’s the second time in less than five years the late night operator has been forced to warn on its future, after it underwent a major restructuring amid the pandemic.
Its portfolio has now been reduced to 23 sites.
Michael Kill, chief of the Night Time Industry Association, told City A.M, he is having regular calls with sector workers about the challenges they face.
He said: “Many of the businesses are still suffering from the pandemic and now they’ve moved into a cost of operating crisis and they’re also being squeezed by the cost of daily living.”
Kill worries a lot of businesses will “go to the wall” this year if the government doesn’t deliver “something meaningful” for the sector.
He added: “The only way we see that is a VAT cut to about 12.5 per cent but it’s got to be across the board. They cannot exclude wet led sale businesses.”
Government has lowered VAT to below its usual rating of 20 per cent in times of economic trouble before.
During the pandemic, VAT was temporarily reduced to five per cent for the hospitality sectors, and was kept at 12.5 per cent for five months between October 2021 and March 2022.
Kate Nicholls, chief of UKHospitality, said: “Extortionate operating costs are making it incredibly challenging to run a profitable business, so it’s vitally important that this is addressed in order to ease ongoing cost pressures and protect businesses from the threat of closure.
“This sector is one of the UK’s leading employers, providing work to more than 3 million people, and contributing more than £93bn to the economy each year. It not only deserves the support we are collectively asking for, but it needs it.”
Today, the trade body and 112 leading pub and restaurant owners have written an open letter to the Chancellor laying out what support measures they would like to see on the upcoming budget day.
These include introducing a temporary cut in the lower rate of employer national insurance contributions to 10 per cent, and reducing VAT for the sector to 12.5 per cent.
Nicholls added: “I sincerely hope that this letter, supported by leading individuals from across hospitality, will be enough to convince the Chancellor that his actions on 6th March will be make or break for many venues up and down the country.”
“The sector’s message to the Chancellor is loud and clear: without further economic support at the upcoming Budget, we risk losing more of our institutions and doing irreversible damage to our world-leading hospitality sector.”
City A.M has contacted The Treasury for a comment.