Hospitality faces 'critical situation' as only one in three businesses reported as profitable

By James McAllister

- Last updated on GMT

Hospitality faces 'critical situation' as only one in three businesses reported as profitable

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Hospitality businesses across the UK are facing a 'critical situation' with only 37% currently turning a profit, a new study has warned.

The survey, conducted by the British Beer and Pub Association, British Institute of Innkeeping and UKHospitality, found that the biggest factors facing operators are the rising costs of energy (74%), goods (55%) and labour (54%). 

Almost half (45%) of businesses report that they are being forced to reduced opening hours to avoid closing permanently and one in six reporting they have no cash reserves.

In a joint statement, the three trade bodies 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.

The survey comes almost one year after the Government released its Hospitality Recovery Strategy, which looked to increase the resilience of the sector by improving profitability and putting pubs, bars, and restaurants at the heart of plans to revitalise local economies after the pandemic.

Now hospitality leaders are calling on the Government to recognise the contribution hospitality businesses can make to the economy whilst noting that less than one-third (28%) are currently considering investing in their businesses because of the challenging economic climate.

The group highlights three key priorities to get the sector back on track: tackling the current inflationary headwinds facing the sector; reforms that would unleash growth potential and a new tax and investment regime that facilitates a resilient and productive hospitality sector.

“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,” the trade bodies added.

“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.”

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