Byrons, Jamie’s Italian, Barbecoa, Handmade Burger Co, Viva Brazil, Square Pie, hundreds of pubs, restaurant groups, cafes and bars are all in financial trouble, as a leading law firm suggests that insolvencies in the hospitality industry are increasing at an alarming rate.
“Pressure on the restaurant sector is now hitting even the biggest names on the high street,” said Jeremy Willmont, head of restructuring at Moore Stephens. “The jump in insolvencies over the last year demonstrates just how tough the current economic conditions are for the restaurant trade.”
A perfect storm of
- an increase in food prices
- the weakness of the pound impacting on European equipment costs
- the rise in wages and low staff recruitment
- a massive rise in business rates; an increase in leasehold rents – some of that linked to property regulations preventing development and providing a lack of incentives to negotiate rent downwards
- an unfair taxation system directly benefiting out-of-town supermarkets over pubs and restaurants especially in VAT-term
have all conspired to dramatically increase the financial pressures on the industry.
There are solutions, and the recent merger of two hospitality industry trade bodies might lead to some of them. However, as both organisations have to-date failed to resolve many key issues such as VAT, business rate increases, the rise in apprenticeship levy costs, you might not want to hold your breath.
When sane and normal journalists get very angry it is perhaps worth sitting up and taking notice – something neither Mrs May nor Spreadsheet Phil bothered to do with regard to to Sean O’Grady in The Independent on the subject of Business Rates. This link to his article in The Independent might give you something to think about. http://tinyurl.com/wwwhww1902