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Quarter of hospitality businesses run out of cash reserves

Published:  19 February, 2024

A joint survey by UKHospitality, the British Beer and Pub Association, British Institute of Innkeeping and Hospitality Ulster has revealed the cost pressures facing venues compared to 2023. 

The research shows that 25% of the surveyed businesses have no cash reserves and another 29% only have enough for the next three months.

The results also show that 98% of venues have seen food and drink costs increase, whilst 96% have seen wage costs increase, and 98% are concerned about the National Living Wage rise in April. 

As a result, almost two-thirds (64%) of venues have said they are ‘not optimistic’ about their business’s prospects for the next 12 months, an increase of 6% compared to October 2023.

Respondents were clear about their priorities for government action at the forthcoming Budget, with 94% prioritising a lower rate of VAT. 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, illustrating the need for measures to address the sector’s high cost and tax burden.

In a joint statement, the trade bodies 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.

“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.”

Meanwhile, the Home Office is proposing a blanket relaxation of licensing hours if any of the qualifying home nations reach the semi-final or final of the men’s 2024 European Championships.

Licensing hours for these games are proposed to be extended to 1am in England and Wales, which will be particularly important for any games on a Sunday, including the final. On Sundays, many venues are only licensed until 10.30pm.