UK nightlife and hospitality ‘teetering on brink’ of collapse as government intervention urged
The UK’s hospitality and nightlife sector is “teetering on the brink” of collapse, industry voices have warned, after a number of high profile closures have piled pressure on the government to provide more support.
Less than a month into the new year, it has been reported that up to 43 hospitality venues across Britain face permanent closure largely due to customers spending less and red-hot supply costs.
Revolution Bars announced it would close eight underperforming venues, including sites in Southampton, Reading and Liverpool, because of young people no longer being able to afford a night out.
Just weeks later, Prism owner Rekom warned that its 35 nightclubs were risking closure after it was forced to call in administrators.
It’s the second time in less than five years the late night operator has been forced to warn on its future, after it underwent a major restructuring amid the pandemic.
Michael Kill, chief of the Night Time Industry Association, said: “The nightlife sector is in crisis, and we implore the Chancellor and Prime Minister to recognise the urgent need for support before it’s too late.
“As the industry teeters on the brink, we call on the government to acknowledge the gravity of the situation and implement measures that will ensure its survival.”
Across the wider hospitality ecosystem restaurateurs are also feeling the pinch.
Speaking to City A.M, Joshua Hunter, chef owner at Hawthorn, a restaurant in Richmond, said that “hospitality is at a really crucial juncture.”
“Businesses are trying to manage the ever-escalating costs whilst trying to keep prices as manageable as possible for the customer.”
“The government needs to lead the way in recognising the huge contribution hospitality makes culturally and start giving the sector some support. VAT is one of the biggest factors that needs addressing.”
Hunter said that profit margins are much smaller in restaurants than most other businesses so the 20 per cent rate really “isn’t workable”.
“[It] could eventually lead to a high street dominated by big chain restaurants. Times are tough for most people at the moment, but I really hope the public will continue to support hospitality – especially independent restaurants.”
It comes as Sacha Lord, Night Time Economy Adviser for Greater Manchester, is calling for the government to bring VAT back to 12.5 per cent, the level that was paid during the pandemic, and in line with European countries.
While major chain pub groups and restaurants have noticed a cooling in energy bills, the same does not appear to be the case for smaller businesses.
Former MasterChef finalist Tony Rodd was also forced to close his restaurant in Black Heath after his energy bills rose to £1,000 a month.
A statement to customers posted in early January, read: “The decision to close is borne out of the continued financial difficulties caused by Covid, increased energy costs, the cost of living crisis and price increases from all our suppliers that we have had to bear the brunt of for the last three years.”
A spokesperson for HM Treasury said: “Our decisive action helped to more than halve inflation last year, which is protecting businesses around the country from higher costs that they would otherwise have faced.
“We’ve also recently extended measures to support pubs and hospitality, including a 75 per cent discount on business rates and freezing alcohol duty until August 2024.”