Rising costs see UK hospitality industry running out of money

ADVERTISEMENT

A quarter of businesses in the hospitality sector say they are in danger of running out of money with no cash reserves left; a further 29% have less than three months' worth of money put by.

The plea follows a survey by UKHospitality which found licensees working in pubs, hotels and restaurants and cafes looking towards the future with great uncertainty.

Some 98% of them revealed they had seen food and drinks cost rise over the past year, with 96% reporting a rise in wage costs and 98% expressing worry about being able to afford the National Living Wage rise due in April.

The sector has also had to manage the huge rise in energy costs, with 85% confirming that was a great worry.

As a result, also two-thirds (64%) of those surveyed were not optimistic about prospects for the next 12 months. That number is up 6% on views recorded just four months ago. 

Managers are calling on Chancellor Jeremy Hunt to consider cutting VAT, the National Insurance contributions rate and business rates. It is not alone in calling for a total reform of the business rates model, which many businesses consider both inefficient and unfair.

Unsurprisingly, they are also calling for a cut in  alcohol duty.

In a joint statement, the trade bodies representing those working in the industry said: "These results clearly show the perilous state our pubs, restaurants, hotels and cafes find themselves in. The fact that a quarter have run out of cash reserves completely is a real cause for concern. Those businesses are extremely vulnerable to the slightest shock forcing them to shut their doors for good.

"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.

"These businesses need urgent support. Hospitality is the foundation of the everyday economy and absolutely vital in the services they provide.

"If the Government wants 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."