High Streets Initiative ยท 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 Caf? 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.



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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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