Rising business rates the biggest worry for restaurant and bar bosses

23 February 2017 by
Rising business rates the biggest worry for restaurant and bar bosses

Rising business rates are the biggest worry for restaurant and bar business leaders.

That's according to CGA Peach's 2017 Business Leaders' Survey, released today at the Casual Dining Show in London.

The poll of around 250 senior executives found that 55% were very concerned by the government's business rates revaluation, and in particular rising business rates, while another quarter (24%) said they were concerned.

The news comes as some businesses experience a surge in business rates valuations across the country.

Yesterday it emerged that government ministers were set to retreat over the issue after a revolt by Conservative MPs.

Chancellor Philip Hammond was reported to be considering extra funding to help independent retailers and small businesses after warnings that some could see huge increases in the rates that they pay.

Meanwhile, 29 hospitality business bosses signed a letter published on the letters page of The Telegraph yesterday in which they warned that pubs and restaurants were "the only business sector facing massive business rate increases in every British region".

When it came to confidence in the out of home eating and drinking sector, the survey found that it was returning, despite concerns about rates and other input costs, as well as Brexit.

Two thirds of business leaders declared themselves to be very optimistic (10%) or optimistic (5%) about their business prospects over the next 12 months. This was well down on the start of 2016 (83%) but up on November 2016 (61%) when there was uncertainty over the impact of Brexit on staffing and the economy.

Meanwhile, operators were also concerned about rising costs in other areas including food where four in five leaders are either very concerned (41%) or concerned (39%), led by lower availability of items including vegetables.

Retal prices are also rising strongly, particularly in London, with half of executives now either very concerned (31%) or concerned (23%) by property costs.

And they also expressed worry about rising pay following the introduction of the National Living Wage, with 24% very concerned and 35% concerned about the issue.

They also raised the problems caused by rising drinks supplier prices and the threat of saturation triggered by an over-supply of sites.

However, confidence varied according to where in the country operators are based. More than half (57%) of those businesses based within the M25 were optimistic about the market, compared to 42% with a national spread.

And smaller businesses tend to be more optimistic than their larger counterparts. A quarter of those businesses established less than five years ago said they were very optimistic about their prospects in 2017.

There was also optimism on certain issues. A fifth (21%) of leaders planned to open at least 10 new sites in 2017, rising to three in five (60%) of those with more than 200 sites.

Just under a third (29%) of operators were looking at a business acquisition within the next 12 months, with a similar number (27%) interested if an opportunity became available.

And more than a quarter (29%) said their business had grown internationally in the last year.

Two in five leaders (40%) said they thought customer spend would increase slightly in 2017, with another third (33%) anticipating no change.

CGA Peach vice-president Peter Martin said: "Our fascinating Business Leaders' Survey reveals a sector facing a barrage of input costs in property, food and people, with rates the issue at the top of execs' in-trays. But this is a positive industry that is very much on the front foot rather than in retreat and that deserves government support to ease its burden of expenses. Operators will have to ride out some big challenges in 2017, but strong, differentiated operators that can deliver a compelling offer while keeping a tight rein on their costs are well placed to thrive both this year and beyond."

Foodservice prices rise due to low supply and rising costs >>

Restaurant groups report December like-for-like sales surge >>

Foodservice pricing falls but remains 2% up on last year >>

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