A third of restaurants, pubs and hotels at brink of collapse, trade bodies warn

A large proportion of Britain’s pubs, restaurants and hotels could go bust by the end of the year as the cost of running their business becomes impossible, trade bodies have warned.

A survey of more than 500 businesses in the hospitality sector found that the vast majority are facing higher energy and food costs, which has sent confidence in the future survival of their firm plummeting.

Leading trade associations UKHospitality, the British Beer and Pub Association, The British Institute of Innkeeping and Hospitality Ulster joined forces to urge the Government to provide a lifeline for struggling firms.

The survey found that more than a third of hospitality businesses were expecting to be operating at a loss or be financially unviable by the end of the year. It comes as a massive 96% said they were experiencing higher energy costs and 93% complained of food price inflation.

Meanwhile, more than three quarters of hospitality venues reported seeing a decline in people eating and drinking out in a sign that cost-of-living pressures have taken a toll on consumer spending, with 85% expecting it to get worse.

In a joint statement, the industry bodies warned of the “cost of doing business crisis” which it says is crippling firms in the hospitality industry.

They said: “The results clearly lay out the stark situation facing hospitality businesses, with many on the brink due to the cost of doing business crisis.

“The vulnerability of the sector due to soaring energy costs, crippling rises in the cost of goods and dampening consumer confidence is on full display in this survey and if urgent action isn’t taken, it is looking incredibly likely that we will lose a significant chunk of Britain’s iconic hospitality sector in the coming weeks and months.

“Hospitality has huge potential to be a real driver of economic growth, job creation and deliver millions to the Exchequer and our local economies.”

The trade bodies – which collectively represent tens of thousands of businesses across the UK – said that further business rates relief is “critical” to avoid companies’ facing a cliff-edge in April next year, when the new tax year begins.

They added: “In the long-term, a move to cut VAT for hospitality would do wonders in giving consumers the confidence they need to support their local hospitality businesses, which are so important to our local communities and the economy.”

The bodies urged the new Prime Minister to work with the sector on its suggested measures.

The remarks come as a Michelin-starred restaurant in Whitby announced it has been forced to close because of a lack of financial support from the council during Covid.

Star Inn the Harbour said it will close on November 12 because of the “utter lack of support” received from Scarborough Borough Council, which it said provided just two months’ Covid business support.

Its owner Andrew Pern said: “It is with great sadness and a heavy heart that we have decided to close The Star Inn the Harbour.

“The most damaging and miserable fact that marks their card is that [the council] took rent from us and most other businesses in the town during lockdown when we didn’t have a penny coming in.

“How greedy and short-sighted is that in a place which relies heavily on tourism and hospitality?”

He added that the restaurant has been forced to close as it approaches the costlier winter months and after a “continuous battle” to work with the council since opening in 2017.

The restaurant is part of the Star Group of Restaurants, which includes the Michelin star listed The Star at Harome, The Star Inn the City, and The Winter Hütte in York.

All staff at the Whitby restaurant have been offered jobs at the other sites, Mr Pern said.

A spokesperson for Scarborough Borough Council said: “We are sad to hear about the decision to close the Star Inn the Harbour in Whitby, but to blame it on us is unfair.

“We have been working closely with the restaurant for several months to ensure it can continue to trade during difficult times.

“At the restaurant’s request we renegotiated the terms of its tenancy. Those terms were agreed in good faith but the restaurant recently walked away.

“Our local support for the restaurant has been in addition to the national help it was eligible for such as Covid grants and the Government furlough scheme.

“As the custodian of public money, there will always be a limit to the help we can provide to individual businesses.”