10,000 Pubs & Restaurants at Risk of Closure Says Hospitality Chief

An estimated10,000 pubs and restaurants are at risk of closure thanks to a ‘perfect storm’ of inflation, soaring energy costs and rising rents, according to UKHospitality CEO Kate Nicholls

In a interview with The mail on Sunday Ms Nicholls said the hospitality sector is facing ‘as big a crisis, if not bigger’ than during the pandemic.

‘We’re already seeing a lot of independent operators handing in the keys and walking away,’ the chief executive of trade body UK Hospitality, adding : ‘I’ve never seen such a toxic cocktail of costs. It is a perfect storm.’

Inflation in the restaurant trade is currently running at between13 and 17 per cent due to supply-chain issues, the war in Ukraine, and increase staffing costs due to staff shortages.

Emma McClarkin, chief executive of the British Beer & Pub Association, said: ‘Cost inflation means we have to trade 20 per cent up just to stand still. We know that keys are being handed in at some tenancies.’

The working-from-home trend has hit city-centre venues.

Calling for a rethink on VAT, Wetherspoons boss Tim Martin said: ‘Pubs and restaurants pay 20 per cent VAT in respect of food sales, whereas supermarkets pay nothing, enabling them to subsidise the price of the beer they sell.

‘Unless there is tax equality, the hospitality sector will lose out.’

A survey earlier this month revealed that just about half (48%) of night-time businesses are ‘barely breaking even’, with a further 20.2% losing money.

Half of businesses have seen a 30% increase in operating costs compared with pre-pandemic levels. Almost 45% are “unsure” if their business will survive the next 12 months, with an additional 20.8% stating they are “not confident”.

Those who had renewed both gas and electricity contracts in the last four month have seen a 37% increase in energy costs, with contract renewals in electricity seeing up to a 54% increase and gas contracts seeing up to 151% increase for businesses.

The NTIA also said there was “still some way to go” to see the true impact of cost inflation, with over 53.8% of businesses still to renew energy contracts.

Meanwhile, 36.5% of respondents said their weekly sales had dropped by 30% in comparison to pre-pandemic trade levels, and respondents on average were still carrying £133,957 worth of supplier and bank/loan debt.

54.8% of respondents said their business had ‘little scope’ to increase prices within their local market, with a further 20.8% stating they had no scope whatsoever.