Yahoo Finance ‘Customers can’t afford to pay’: Fears for London’s hospitality scene mount before general election
Fears for London’s hospitality scene are mounting among restaurant and pub owners ahead of the next general election.
Many reveal they are still trading below pre-pandemic levels due to red hot supply costs and pressures on consumer spending, as Brits are about to get very distracted.
‘It doesn’t take much to put you over the edge’
Jesse Charlebois, the landlord at the Prince Arthur pub in Shoreditch, told City A.M. “the whole industry has changed” following the aftermath of strict lock down laws which took place four years ago.
He said: “[Spending is up] on last year but overall still below pre covid, the whole industry has changed. People’s habits and budgets have changed a lot in just a few years and with young people drinking less and less it’s really a perfect storm for stagnation in the industry.”
The publican has found utility costs are up about 200 per cent compared to a couple of years ago after Russia’s invasion of Ukraine impacted wholesale gas prices.
He explained: “With inflation running rampant last year we all had to tighten our belts and increase our costs without increasing our profitability so you have less money to invest back into the business. If you were already on the bread line as a business it doesn’t take much to put you over the edge.”
Ahead of an upcoming general election, Charlebois said he would like to see a cohesive policy about the hospitality business.
He said: “It’s a huge industry for Britain and should be treated as such. If there were 50 car showrooms closing a week the government would intervene…hospitality is part of the country’s economy and has to be treated as such and not just as an afterthought, which we often are.”
‘Customers can’t afford to pay even if they wanted to’
While Rishi Sunak’s government has introduced a number of measures for hospitality, such as extending the alcohol duty freeze until February 2025, many venues across London are still feeling the squeeze.
Inflation has also cooled to 2.3 per cent, well below the record highs of 11 per cent recorded in October 2022.
Joshua Hunter, chef owner at the Hawthorn restaurant in Richmond, said he doesn’t think the government is “doing anything to address the situation”.
“Hospitality is being squeezed from every end. Wages have gone up exponentially and prices have continued to escalate.
“With produce for example, prices are continuing to march up noticeably. It’s not in line with what the consumer is prepared to pay or ready to pay at this point. People have been squeezed so badly by the cost-of-living crisis that it means they can’t afford to pay it even if they wanted to.”
He added: “We have seen a lot of pushback from customers on wine prices this year but the reality is, especially with the duty increases, we’re still pricing the wine at a relatively modest rate.
“Plus, the margins are so difficult to make on the food that there has to be some margin made on the wine, which is very difficult because consumers don’t seem to want to pay it.”
Hunter would like to see a drop in the rate of VAT for hospitality, which currently sits at 20 per cent.
He explained: “I don’t think that hospitality should be taxed at the same 20 per cent VAT rate, other businesses don’t have the same kind of costs to contend with. I think that’s the biggest factor in what’s causing businesses to struggle and potentially fail.”
What hospitality wants from government
Fresh pressure on government officials comes just six weeks before the UK’s next general election.
It has also promised to revamp empty shops, pubs and community space.
Kate Nicholls, chief executive of UKHospitality, told City A.M. she needs to see “evidence of measures that can unlock the potential”
She explained: “Hospitality businesses lie at the heart of every constituency in the country. In serving Britain, the sector creates places where people want to live, work and invest.
“We need to see all political parties recognise this and will be working hard on behalf of our members during this period, to ensure manifestos from across the political spectrum reflect the strategic importance of our sector.
She added: “We need to see evidence of measures that can unlock the potential of our sector to do even more.
“These include promises of action to lower the tax burden on our industry, initiatives that give us greater access to workers, and other measures that will support us in creating more jobs and further upskilling the workforce.”
City A.M. has approached HM Treasury and Labour for comment.
