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Morning Briefing for pub, restaurant and food wervice operators

Mon 19th Dec 2016 - Restaurant bosses join forces to highlight key issues to prime minister ‘crippling’ industry
Restaurant bosses join forces to highlight key issues to prime minister ‘crippling’ industry: Restaurant bosses have demanded prime minister Theresa May eases the “crippling” burdens caused by a perfect storm of soaring business rates, taxes and the weak pound. Chief executives from 23 companies including Casual Dining Group, The Restaurant Group, natural fast food brand Leon, Wagamama, PizzaExpress, Mexican restaurant brand Wahaca, YO! Sushi and Carluccio’s have warned they must get help offsetting a “shocking” combination of new overheads. They have also urged May to give assurances they will be able to retain foreign EU workers after Brexit. But their biggest fear was looming new business rates, which will hit London companies particularly hard. Some of the signatories to the letter in the Evening Standard will be hit by rates rises of more than 50% as the new valuations are being phased in from next April. Analysts have said the rates, added to upwards-only rent reviews from landlords, could see scores of shops and restaurants go out of business. Leon co-founder and chief executive John Vincent said: “London’s restaurant chains are being squeezed as never before and we really need some respite, particularly from the huge hike in business rates. The Leon in The Strand alone will see its rates go up by £24,000 next year. That’s why we’re joining together with other restaurants to make this call for action. The government needs to listen or restaurants will close and thousands of people will lose their livelihoods.” Restaurateurs also face higher prices on ingredients bought from Europe due to the collapse in the value of the pound since June’s Brexit vote. Some products have become 20% more expensive. The letter said they are also being penalised by the tax system that orders them to charge 20% VAT. On top of these costs, the chains are being hit by a new apprenticeship tax and increases to the National Living Wage from £7.20 an hour to £7.50 next year and towards £9 by 2020. Although the companies said they “strongly support” these initiatives on pay, they need the extra costs to be offset elsewhere in the tax regime. The letter adds: “We employ hundreds of thousands of people and pay millions in VAT, business rates, National Insurance and other taxes. In other countries, taxes are lowered for the hospitality sector in recognition of the foreign earnings it brings in, offsetting trade deficits. However, in this country, we’re not sure the government has modelled and understood the mounting, crippling commercial pressures we face and we urgently call for [Mrs May’s] support. Finally, we want to tell the prime minister that there is a widespread anxiety about the fate of our sector if we lose significant numbers of our hard-working teams, many of whom come from Europe.” The companies demanded the prime minister considered a reduction in VAT, an extension to the phasing-in period for business rate rises and a cut to employers’ National Insurance contributions. British Hospitality Association chief executive Ufi Ibrahim said: “Restaurants are being hit by a perfect storm of extra costs. We fear that business rate rises will have a very damaging effect on our ability to keep contributing to jobs and the economy. We are very concerned. We have asked the chancellor for help but he has done nothing.” The Treasury highlighted how it had cut business rates in many parts of the country and was supporting the “minority” of businesses facing an increase with £3.6bn of transitional relief. It added it had cut the cost of employing new staff.


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