Many Hospitality Businesses In Danger Of Running Out Of Cash

A joint survey by the British Beer and Pub Association, British Institute of Inn keeping, Hospitality Ulster and UK Hospitality has revealed disturbing figures for the hospitality sector across the whole of the UK. It has found that 25% of hospitality businesses have literally no cash reserves left, with a further 29% with just 3 months of reserves left.

This shows the sector is in dire straits with the rising prices in raw materials and the cost of wages, along with the fact that so many of their prospective customers are struggling with the cost of living crisis, leaving hospitality in a sorry state.

Rising Costs Leave An Air Of Pessimism In The Sector

Here is some of the data from the survey, as copied from an article in the Belfast Telegraph. It reveals that:

‘98% of businesses saw food and drink prices rise, while 96% said that wage costs had increased, and 96% also said they were concerned about the National Living Wage rise in April.

‘Rising costs experienced have left almost two-thirds of feeling not optimistic about their business’s prospects for the next 12 months, an increase of 6% compared to October 2023.

‘Respondents were also asked about what the priorities for the UK Government for the upcoming budget should be, and 94% said that a lower rate of VAT should be prioritised.

‘A lower business rates multiplier for hospitality (80%) and business rates reform (71%) rounded out the top three priorities.

‘Reducing employer National Insurance Contributions (51%), further energy support (48%), capping the business rates increase in April (44%) and reducing the rate of alcohol duty (44%) were also popular amongst respondents.’

Businesses Are Extremely Vulnerable To The Slightest Shock

Also in the same article it quotes the trade bodies, who in a joint statement 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.”

The trade bodies are absolutely right, hospitality businesses clearly need help ASAP and reducing the VAT they pay and cutting duty would be an excellent start to getting them back on their feet.