More than 10,000 hospitality businesses at risk of closure

By James McAllister

- Last updated on GMT

More than 10,000 hospitality businesses restaurants pubs at risk of closure warns Kate Nicholls UKHospitality

Related tags ukhospitality Government Kate nicholls Inflation

More than 10,000 pubs and restaurants are at risk of closure due to 'perfect storm' of inflation and surging energy costs, UKHospitality chief executive Kate Nicholls has warned.

Speaking to The Mail on Sunday​, Nicholls said the hospitality sector is facing ‘as big a crisis, if not bigger’ than during the pandemic. 

“We’re already seeing a lot of independent operators handing in the keys and walking away,” she said.

Nicholls estimated that 20,000 of UKHospitality members’ businesses are still operating below break-even and 30,000 have no cash reserves. 

“I’ve never seen such a toxic cocktail of costs. It is a perfect storm.”

Year-on-year inflation in the foodservice sector hit 13.6% in March 2022, according to the most recent​ CGA Prestige Foodservice Price Index.

Nicholls was one of a number of prominent voices within the sector to have called on Chancellor Rishi Sunak to alleviate financial pressures facing the industry​. 

One suggestion has been a temporary reduction in VAT on business energy bills​ from 20% to 5%, with Sacha Lord, Greater Manchester's night time economy adviser, saying it will help save small businesses and the livelihoods of the hundreds of thousands across the UK that they employ.

An 'extremely fragile' industry

A survey published last week by the Night Time Industries Association (NTIA) laid out the devastating impact cost inflation is having specifically on night time economy businesses, with nearly half (48%) of respondents 'barely breaking even' when asked if their business is still profitable based on the increase of trade cost, with a further 20.2% stating that they're losing money.

Concerningly, 44.7% of the more than 200 operators surveyed said they are 'unsure' if their business will survive the next 12 months, with an additional 20.8% stating they are 'not confident'.

More than a third (36.5%) of respondents said their weekly sales have dropped by 30% in comparison to pre-pandemic trade levels, with a further 15.5% of respondents have experienced up to a 50% loss in that period. And on average, respondents said they were still carrying £133,957 worth of supplier and bank or loan debt.

Michael Kill, CEO of the NTIA, said: “These figures are extremely hard to ignore, the situation is worsening day by day, with operating costs becoming untenable. We are starting to see the impact on customers through slowing tickets sales,  bookings and frequency of visit.

“Our industry is still extremely fragile, many will struggle to survive another crisis.

“Time is running out, the Chancellor must act now, and answer the calls from the industry to reduce VAT back down to 12.5% and an energy cap for SME businesses.”

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