Reeves under pressure to extend tax relief to rest of hospitality sector: Rachel Reeves is under growing pressure from restaurants, shops, cafés, hotels and music venues to rethink an impending rise in business rates as the chancellor prepares to announce a limited package of relief that will apply only to pubs. The FT reports that Reeves has decided to provide greater support for pub owners who have been facing big jumps in rates over the coming years following her November Budget, according to people familiar with the situation. The announcement, which is expected within days, will also include changes to licensing to allow later hours and more pavement drinking. It will be the latest of a series of U-turns by Sir Keir Starmer’s government, following the prime minister’s decisions to change tack over the removal of winter fuel payments, an attempt to cut billions in disability welfare payments and higher inheritance tax on farm estates. But there have already been questions as to why only pubs have been singled out for help. Kate Nicholls, chair of UKHospitality, said: “The entire hospitality sector is affected by these hikes – from pubs and hotels to restaurants and cafés.” Alex Reilley, executive chair of hospitality group Loungers, said the pub industry had been facing an “extinction event” from the threat of rate rises but that the majority of his 250 bars, cafés and restaurants would not qualify for support. “The way pubs are assessed as separate to the rest of the hospitality sector is ludicrous,” he added. Simon Wood, a MasterChef winner, chef and restaurant consultant, told the FT that it was inevitable there would be more restaurant closures. He said the current environment made it “financial suicide to consider opening a restaurant – you either do it because you have very deep pockets or it’s a vanity project. “Politicians don’t understand the wider hospitality sector and food industry – the low margins and the work it takes. But there are plenty of MPs happy to have their photo pulling a pint, that they aren’t going to pay for.” Hotels are one of the worst affected sectors, and their rates are set to rise 115% over the coming three years. Jo Boydell, the chief executive of Travelodge, told The Times: “If hotels are excluded from support, the impact will not just be felt on balance sheets. It will affect investment decisions, new hotel developments and ultimately jobs across the country.”

Sector facing another year of opportunistic deals and restructurings: The UK’s hospitality sector is facing another year of opportunistic deals and restructurings, while those businesses looking to assess their options will need to recalculate their budgets, and would-be suitors their valuations. Writing in this year’s Propel 500 report, published at 9am on Friday, Propel chief operating officer Mark Wingett said that the foundations for M&A in the sector over the past few years have been built on shifting sands, and it is no different as the industry enters 2026. He said: “As we enter 2026, we do so on the back of another budget that has caused further sector shockwaves. Hospitality has demonstrated resilience through recent years of disruption, but that resilience is being tested like never before.” Propel 500 – 2026 will be released on Friday, 9 January at 9am and will be available free to Premium Club subscribers. The report will be available to non-Premium Club subscribers for £595 plus VAT. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.

Reeves prepares bailout for pubs drinking at last chance saloon: Rachel Reeves is poised to announce a bailout worth about £300m for pubs that have been left on the brink of bankruptcy by rising business rates, in Labour’s 12th major U-turn since coming to power. The Times reports that the climbdown will be announced within days after a backlash from Labour MPs and hospitality firms over changes announced in the budget that come into force from April. Ministers are considering how to target the support, and Treasury insiders said they could change the methodology used to calculate rates, or increase the discount for pubs. Ministers are considering three main ways to help pubs, as industry sources said some could close soon as the self-assessment tax deadline looms. One is changing the methodology used to calculate pubs’ business rates. Under the existing scheme set to come into force from April, rates for pubs will rise by 76% over three years. Another option is raising the discount available to small retail, hospitality and leisure businesses. The government legislated to let itself set the relief rate at 20%, but defied industry expectations and settled on 5%. The third option would be changing the “multiplier”. This is a figure that a business property’s rateable value is multiplied by, and is sector specific. The size of the support package was estimated by government insiders at about £300 million. But they stressed the final cost would be determined by the exact changes decided on by Reeves, and subject to scoring by the Office for Budget Responsibility. Allies of the chancellor said the Treasury had been blindsided by how badly pubs would be affected under the initial plan for business rates changes. The chancellor had become aware last month of the steep rates rise facing pubs due to the revaluations after the ending of pandemic-era relief, initially worth 75% but downgraded to 40% by Reeves in the budget and set to fall to nothing from April. An announcement is still expected to be days or weeks away, but Treasury insiders said they wanted to show their intention to cushion the blow for pubs, given a potential rebellion in parliament on Monday.

Bill’s reports “strong” year with adjusted Ebitda increasing to over £11m, renews bank facility: Bill’s, the Richard Caring-backed restaurant group, said it delivered a strong year in the 12 months to 5 January 2025, with adjusted Ebitda increasing 12% to £11.3m. Revenue grew to £96,389,000 (2023: £95,263,000), aided by the addition of two new sites, the first in over five years. The company posted a pre-tax profit for the period of £2,277,000 (2023: £3,412,000). The business said: “Despite continuing inflationary pressures and consumer sentiment, gross profit margins improved on the previous period with management of supplier contracts and conversion to adjusted Ebitda improved markedly to 12%. Changes to legislation and increases in living wages put pressure on achieving like-for-like labour margins without compromising customer service levels. At the statement of financial position date, Bill’s remained in a net liability position of £22.3m (31 December 2023 – £24.6m). Indicators of impairment were noted as the asset base of some restaurants continued to remain high comparative to remaining lease terms. As a result of this assessment, a net impairment of assets was recognised totalling £1.8m (31 December 2023 – (£1.1m)). An additional £1.2m was provided for onerous leases (31 December 2023 – £0.1m). The provision is based on the expected cash outflows over a 24-month period. The company is party to a debt facility held by the parent company, Bills Stores. At the statement of financial position date, the HSBC facility was £35m and was fully utilised. Subsequent to the period end, the expiry date of the facility, was extended for a further 36 months through to March 2028. As part of the renewed facility, £0.5m is repayable quarterly from the renewal date until March 2028. The facility was also altered to be in the name of the Bills Restaurants as opposed to the parent company. An arranged overdraft of £2m has also been agreed by the company. Since Bill’s has shed a number of poorly performing sites in recent years, core profitability has improved markedly. Having provided for onerous leases and impaired the assets of these non-trading sites in previous periods, further costs have been mitigated such that only £0.25m was incurred in the period, having disposed of, or sublet, all but two of these sites. The business plans to cautiously open new sites, explore licensing opportunities and uphold customer service levels in the next 12 months.” Last month, Propel revealed that the brand is to make its transport hub debut with an opening at Heathrow airport in the spring. The Tom James-led business will open a 166-cover site in Terminal 2 in partnership with travel retailer Avolta. The company said its first foray into travel locations marked “a significant step forwards” for the business’ global expansion plans. Propel revealed last November that Bill’s, which will celebrate its 25th anniversary this year, will open a new 170-cover site in Westfield Stratford this spring – the largest Bill’s restaurant opening in more than a decade. The company said the new restaurants, which will take its estate to 50 sites, follow a period of strong trading and profitability for the business as it continues to build momentum across the UK. 

Byron sees turnover drop but losses narrow in year before sale: Better burger brand Byron saw a drop in turnover and saw its losses narrow in the year before it received new investment. In the year to 31 December 2024, the then Calveton UK-backed business posted turnover of £14,346,487 (2023: £16,624,962), with a pre-tax loss of £666,237 (2023: £1,322,827). The company said it was the second year of operations of the Byron Burgers under the strategy of reviving the brand and business in the UK market. It said: “The business, like much of the sector, was impacted by the macro-economic factors like inflation in national wages, energy costs, costs of living crisis from 2023 to 2025. As on date of this report, the company has raised further strategic funding from its shareholders and obtained financial undertakings to support the liquidity and cash flows of the business. Business plan for 2026 is focused on restoring profitability through disciplined cost controls, streamlined operations, and sustainable expansion.” Propel revealed last October that Byron had staved off a further restructuring after raising additional equity to continue to “rebuild and grow”. It was subsequently revealed that Niyamo Capital, which was founded and is led by 21-year-old entrepreneur Akshat Tibrewala, had invested £2.5m to take a majority stake in the seven-strong Byron. At the end of last year, Niyamo Capital said it was focused on restoring the better burger brand to “relevance and profitability” – and the acquisition was a major step in its strategy to revive “heritage hospitality businesses” through operational restructuring, technology integration and global market expansion. Under Niyamo’s leadership, Byron’s next phase will focus on “sustainable, data-driven growth while modernising the guest experience and revamping the menu”.

Chief secretary to the prime minister’s pub threatens to charge him double: The owner of one of Darren Jones’s favourite pubs has threatened to charge the senior Labour figure double prices if taxes go up. James Savage, who owns The Eastfield pub in Bristol, told The Telegraph that an increase to business rates would “literally be the end for a huge number of pubs” and that he planned to pass on the cost of higher taxes personally to Mr Jones. The chief secretary to the prime minister is understood to be a regular at The Eastfield and has used it to hold meetings with his constituents in the past. Chancellor Rachel Reeves has faced mounting pressure from the hospitality industry over plans to impose higher costs on struggling pubs and is expected to reverse course. But the proposed tax raid has left many pub owners, including Mr Savage, fearing costs will soar even further after Labour increased National Insurance contributions for employers last year. “We have five pubs in Bristol and the average increase in the amount of business rates we will be paying is 122% – and that’s after the ‘relief’, which the government falsely claims to be so generous, when in fact it offsets only [a] fraction of the increase,” Savage said. He plans to hand the cost of the tax rises to Jones, MP for Bristol North West, by charging him double at the bar when he hosts forthcoming constituency events at The Eastfield.

Pub’s free taxi to give customers time at bar: A publican is preparing to launch a free taxi service for drinkers at his rural pub after he said the government’s plans to lower the drink-drive limit struck “another nail in the coffin” of the hospitality trade. The Times reports that Sean McGahern, a third-generation publican who owns the Royal Forester Inn on the edge of the Wyre Forest in Worcestershire, was previously stopped from running a successful free lift service after local taxi drivers complained. He said he was stopped by the council licensing office in 2009 after several years of successfully operating a free taxi service for drinkers to get to and from his village pub. After the latest hit to his business, he said he needed to relaunch the service to stay afloat and that he was willing to fight his case in court. “This is a death of a thousand cuts,” he said of government plans to reduce the drink-driving limit in England from 35mcg of alcohol per 100ml of breath to 22. The move will bring it into line with Scotland’s limit. “It’s just another deterrent to stop people going out,” he said. McGahern began a free taxi service from his pub, in the village of Callow Hill, in 2007. “I only did it initially because the local taxi firms were reluctant to come out here, but when it got successful they made a complaint to say I was doing it in an unregistered taxi,” he said. “The local licensing officer said I would need to register as an official taxi and provide a service for the disabled. It would have cost me thousands, so I stopped it.” McGahern said his solicitor told him it was a “grey area” of the law and he could have fought his local council in court. “Back then my pub was doing OK but now we are operating under completely different trading conditions,” he said. “These have been the two hardest budgets I have had to operate through and I don’t know where it’s going. They are putting everyone out of business. The increase in the minimum wage has forced me to cut back my staff’s hours by 25%. I had one day off over the entire Christmas period.”