Quarter of hospitality businesses run out of money

A quarter of hospitality businesses have no reserves and almost a third only have three months’ worth of cash according to an alarming new joint survey by the UK’s biggest trade associations representing the sector.

The CGA by NIQ study by UKHospitality, the British Beer and Pub Association, British Institute of Innkeeping and Hospitality Ulster also discovered that 98% had seen their food and drink costs rise, 96% seen wage costs increase and 85% have seen energy costs go up.

In addition the on-trade is not feeling positive about the future, with almost two-thirds (64%) not optimistic about their businesses for the next year, which has rise by 6% from October last year.

It comes ahead of the Budget in March with the trade associations calling on the government to a lower rate of VAT, which was supported by 94% of survey respondents, lower business rates multiplier for hospitality – 88% of those surveyed supported this move, and business rates reform, which received 71% support from the on-trade.

Other measures supported by the on-trade include 51% behind a reduction in employer National Insurance contributions, and just under half (48%) wanting further energy support and 44% agreed to moves on capping business rate increases due in April.

Perilous state

In a joint statement, the trade bodies 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.

“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.

“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.”

This article originally appeared on the drinks business.

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