Quarter of hospitality firms in 'perilous state' and running out of money

19 February 2024 by
Quarter of hospitality firms in 'perilous state' and running out of money

A quarter of hospitality businesses have run out of money are trading in a "perilous state", according to a new report.

The joint study by hospitality trade bodies found that 25% of firms have no cash reserves and a further 29% have less than three months' worth.

UkHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster have joined forces to call for support from the Chancellor in the Spring Budget on 6 March.

Almost two-third of businesses surveyed said they were not optimistic about their prospects over the next 12 months after seeing a rise in food, energy, and wage costs. The National Living Wage is set to rise further, from £10.42 to £11.44, in April.

The trade bodies said the fact so many businesses had run out of money was "a real cause for concern" and meant "the slightest shock" would force them to close for good.

More than 13,000 hospitality firms have been lost since the start of the Covid pandemic in March 2020, according to a study by AlixPartners and CGA by Nielsen IQ, which is over 10% of the UK's total.

In a joint statement, the trade bodies said: "We've already seen too many good businesses shut up shop and that has left cities, towns and villages without a vital community asset where people can meet, host events and share enjoyable experiences.

"It's clear that practically no business has been immune to the relentless price increases that have plagued the sector and can absorb costs no longer, with many already forced to pass these onto customers.

"If the Government want to avoid further inflationary price rises for the public and further closures across hospitality, they need to heed the message from our members to act now."

Some 94% of businesses surveyed said they wanted to see the Chancellor lower VAT, while 80% wanted a lower business rates multiplier for hospitality.

Cross-party MPs backed calls to offer more support to the hospitality industry, including a cut in VAT, in a debate last month.

Andy Lennox, who runs the Fired Up hospitality group in Dorset, is running a petition on the issue which has received over 20,000 signatures.

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