Only one in three hospitality businesses is currently profitable, study warns

Only around one in three hospitality businesses is currently profitable due to rising costs, a new study has warned.

Operators said the biggest factors hitting their bottom lines were the increasing prices of energy (74%), goods (55%) and labour (54%).

The survey, conducted jointly by the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and UKHospitality, comes almost one year after the government released its Hospitality Recovery Strategy.

This aimed to increase the resilience of the sector by boosting profitability and putting pubs, bars, and restaurants at the heart of plans to revitalise local economies after lockdown.

However, the joint survey found 45% of businesses have been forced to reduce opening hours to avoid closing permanently and one in six said they had no cash reserves.

The trade bodies urged the government to recognise the contribution of the industry to the economy but warned only 28% were considering investing in their business because of the challenging economic climate.

In a joint statement, the group said: "These figures are extremely worrying and demonstrate the critical situation hospitality businesses across the country are currently in. Given the chance, our industry has huge growth potential and the ability to play a critical role in the levelling up of communities in every single part of the UK, but instead we are still struggling to get back on our feet properly after a turbulent two years.

"In the past few weeks inflation has hit record levels and costs on key ingredients and utilities has rocketed, whilst consumer confidence has plummeted resulting in fewer customers in our venues.

"We are weathering a perfect storm, but we can't hold on forever, we need relief as soon as possible before the cost of doing business forces venues to close for good."

The group urged ministers to tackle inflation, introduce reforms to encourage growth and a new tax and investment regime to create a "resilient and productive" hospitality sector.

The Caterer has heard from hospitality businesses that have struggled to access bank loans to support their growth plans, with many being told the sector is perceived as too "high risk".

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