HOSPITALITY businesses have been burning through their cash reserves, with many reporting that their operations now have no spare money left.
When asked about the cost pressures facing their venues, compared to last year, no less than 98% of respondents said they had seen food and drink costs increase, 96% have seen wage costs increase, 85% have seen their energy costs increase, and 98% are concerned about the National Living Wage rise in April.
This financial squeeze has left almost two-thirds of businesses (64%) not optimistic about their prospects for the next 12 months, a 6% increase in pessimism compared to October 2023.
Asked what action they’d like to see from the UK Government, survey respondents recorded an emphatic 94% support for a lower rate of VAT on hospitality. A lower business rates multiplier for hospitality was also mentioned by 80% or respondents, and business rates reform was supported by 71%.
In a joint statement, the trade bodies behind the survey 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,” read the statement.
“Measures to help the sector won’t just keep businesses afloat, but it will inevitably lead to further investment from the sector, which has a proven track record of driving economic growth, creating jobs and creating fulfilling careers.
“It’s clear that practically no business has been immune to the relentless price increases that have plagued the sector and can absorb costs no longer, with many already forced to pass these onto customers,” the trade bodies admitted.
“If the Government want 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.
“Addressing the looming business rates increase, implementing a lower rate of VAT for hospitality and cutting duty would be good news for businesses, consumers and the economy. We urge the Chancellor to act at his Budget next month.”
The survey was the work of CGA by NIQ, which contacted hospitality businesses between 15 January and 1 February 2024.
