One in six hospitality businesses at risk of closure, research shows

One in six hospitality venues are at risk of closure within the next 12 months, recent survey data has shown.

 

Research conducted by CGA by NIQ between 19 May and 9 June on behalf of UKHospitality, the British Beer & Pub Association, the British Institute of Innkeeping and Hospitality Ulster revealed that almost a quarter of respondents (23%) are operating at a loss, up from one in seven (15%) three months ago. Another 5% have said their business is no longer viable.

 

Over the past few weeks, The Caterer has reported on a number of notable closures, including Le Vacherin in London’s Chiswick, Moro in London’s Hackney, and Maya Manchester.

 

Meanwhile, Simon Rogan, owner of three-Michelin-starred L’Enclume in Cumbria, said last month he is “not making any money whatsoever, and we’re just keeping our heads above water”.

 

Survey respondents, who together operate more than 16,000 hospitality sites, said that cutting hospitality VAT would be the most effective way of supporting the industry, with 89% in favour of a cut.

 

It came as the #VATsTheProblem campaign, launched earlier this month and spearheaded by chef Tom Kerridge, continues to call on the government to reduce VAT to 10%, in line with Europe.

 

More than 235,000 people have backed a petition to cut hospitality VAT to 10%. The UK faces the second-highest VAT rate in Europe, and Ireland is considering reducing its rate to 9%.

 

From 1 July, hospitality businesses will be engaging with customers about the #VATsTheProblem campaign.

 

In a joint statement, the trade bodies supporting the campaign said: “We are seeing the devastating impact of hospitality’s heavy tax burden escalate before our eyes.

 

“The reality is stark. The number of businesses now operating at a loss is accelerating rapidly and too many businesses are facing the gut-wrenching decision of whether they have to close their doors for good.

 

“Our local pubs, restaurants, hotels, cafés, and many more, are integral parts of our communities. They create millions of jobs, drive growth on our high street and support cities, towns and villages. The loss of these businesses is more than just numbers on a spreadsheet, it tangibly impacts our society and our culture.

 

“The government needs to act to back hospitality and reduce its tax burden. The sector is united – a cut to VAT is the most impactful way to support hospitality and drive growth. The government should cut VAT to 10%, bringing the UK in line with Europe.”

 

Kerridge added: “Our hospitality culture in the UK is the best in the world, but we continue to be hit with unfair levels of tax. Just look across Europe. Almost every other country recognises the need to support hospitality with a lower rate of VAT. Now, Ireland becomes the latest.

 

“There are 235,000 people who agree with us that the government should act to bring hospitality VAT down to 10%, in line with Europe. VAT is the problem – 10% is fair for hospitality.”

 

Prime minister-in-waiting Andy Burnham stated in his first major policy speech since becoming Makerfield MP that he would look to reform business rates for pubs and other high street businesses, but did not mention hospitality VAT.

 

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