High Streets Initiative · 13 March 2018

Cost of doing business leaves high street restaurants at “tipping point”

Restaurant owners are braced for a £652.91m business rates rise in April 2018

The UK’s hospitality industry has demanded government action to support high street restaurants left reeling from a series of “body blows”.

Following a string of high profile store closures, with chains such as Prezzo and Byron reducing outlet head count, signatories from across the hospitality sector wrote to the chancellor to raise a number of issues.

The letter read: “Recent weeks have seen a disappointing flurry of restaurant venue closures as a result of the perfect storm of soaring business rates, rising employment costs and Brexit-fuelled inflation that is hitting the UK’s hospitality industry. Our outlets are the lifeblood of our high streets, towns and villages, and have long driven regeneration and employment in local communities.”

Minimum wage increases and rising food costs continue to stretch the margins of small restauranteurs, but business rates was raised as the headline concern for the sector, as 8,000 restaurants across England face property tax rises above inflation when the next rates cycle begins in April.

According to ratings advisor Altus Group, restaurant owners will pay and extra £652.91m in business rates over the next business rates regime. Following last year’s revaluation, 3,220 small restaurant businesses will see bills increase ahead of September 2017’s three per cent consumer price index (CPI).

Over the five-year cycle, the average tax rise per restaurant could reach £24,133.

Take a look back at our business rates coverage:

Steve Richards, CEO of Casual Dining Group, which oversees the Café Rouge and Las Iguanas brands, warned that “high business rates stifle the sector’s growth potential and ability to create more jobs”.

Meanwhile, Kate Nicholls, chief executive of UKHospitality, said investment in local communities, business growth and people would stutter without “fundamental reform” of the rates system.

“Restaurants are reeling from a series of body blows which have combined to bring what was a dynamic, innovative sector to its knees,” she added.

Alex Probyn, president of UK business rates at Altus Group, said: “There has been huge growth in the casual dining market with restaurant numbers up 15 per cent overall since 2010. The race for space has pushed up rents impacting on rateable values. Extra tax for business rates coupled with rising food prices and staff costs through increases in both the national and minimum wages are creating a potentially lethal cocktail as margins are squeezed.”

As well as reform to the business rates system, industry leaders called for a dedicated government minister to protect the interests of the restaurant sector.

__________________________________________________________________________________
Instagram

 

How to serve Instagram-worthy food millennials will love at your restaurant

Millennials spend more on eating out than any other generation, but learning how to successfully market food to them can leave many restauranteurs scratching their heads.

__________________________________________________________________________________

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

KPMG