More restaurants face the chop as business rates soar, warn bosses

Alys Key
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Declining footfall adds another concern to restaurant operators' plates (Source: Getty)

Restaurants are in for another round of pain as a double whammy of declining footfall and soaring business rates looms over the sector.

Industry figures warned that more businesses as another business rates rise comes into force in April. Prezzo, Jamie's Italian, Byron and Strada have all slashed their portfolios in recent months as rising costs bite.

Today, the latest numbers from Springboard show that footfall fell by 0.5 per cent across the UK last month, adding another cause for concern to restaurateurs' plates.

Although the rate of decline has slowed, the three-month average shows a two per cent drop in footfall, the largest drop since April 2016.

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Speaking to City A.M., Springboard's insights director Diane Wehrle said that this could be particularly damaging for the leisure sector.

"Hospitality is probably the most dependent on footfall, it's people coming into the outlets that drives their trade," she said. "The challenge they're facing now is competition. While there is an increase in demand, really it's grown more than the demand has grown."

The statistics come as UK hospitality bosses warn that soaring business rates are threatening restaurant businesses.

A letter written to Philip Hammond urged the chancellor to reduce "the unnecessary costs of doing business" in order to avoid further closures and job losses, saying that the sector is at "tipping point".

Signatories included the chief executives of companies including Merlin, Café Rouge owner Casual Dining Group, Bill's, and Young's Pubs.

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Real estate adviser Altus Group calculated that individual restaurants will see business rates rise by more than £24,000 over the five year re-rating cycle. This will add up to a £2.95bn bill for the industry.

Kate Nicholls, chief executive of trade body UKHospitality, said that other operators could close restaurants if no changes are made.

"Without fundamental reform of the rates system we are likely to see more casualties and a brake on investment in communities, business growth and people,” she said.

Steve Richards, chief executive of Casual Dining Group, said: “The restaurant sector remains vibrant, innovative and dynamic and it has invested heavily in people, growth and communities over recent years, but it is now facing a perfect storm of soaring business rates, rising labour costs, Brexit-fuelled food inflation and softening consumer demand."

Jamie Oliver's Barbecoa shut its Piccadilly site last month after the company fell into administration. Business rates on the site were estimated by CVS to have reached over £530,000 last year, with this set to rise to £625,000 this year.

Other dining groups now considering options include Carluccio's, which has appointed advisers, and food-to-go operator EAT, which is said to be considering closing some sites.

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