Quarter of hospitality firms out of cash as ‘urgent support’ needed
A quarter of UK hospitality firms say they have no cash reserves left, according to new research, as industry bosses have urged the Treasury to prioritise cutting tax for the sector.
The joint survey by UKHospitality, the British Beer and Pub Association, British Institute of Innkeeping and Hospitality Ulster revealed the increased cost pressures facing venues across the country.
The trade groups said UK pubs, restaurants, hotels and cafes are in a “perilous state” and in need of “urgent support” to avoid local businesses shutting for good.
The new data, compiled across hospitality firms between January 15 and February 1, showed that 25% of surveyed business have no cash reserves and another 29% said they only have enough for three months.
The rising costs experienced by businesses left almost two-thirds (64%) not optimistic about their business’s prospects for the next 12 months, up 6 percentage points compared to October 2023.
In response, 94% of businesses said a reduction in VAT should be a priority for the Government.
In a joint statement, the industry groups 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.”
Bosses made the stark warning ahead of next month’s spring budget from the Chancellor.
They urged Jeremy Hunt to help support the industry by the reducing an expected hike in business rates, reducing the current rate of VAT and cutting duties.
In April, high street businesses are set to face a 6.7% inflation-linked rise in business rates, the property tax affecting these businesses.
Industry leaders have also urged for a reduction in VAT, which currently stands at 20% for food and non-alcoholic drinks, to avoid higher pricing in the future.
The groups also called for a cut to duties, after alcohol duty was reformed last year to make certain products, such as many wines and spirits, more expensive.
“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,” the bodies said.
Last year, 6,180 hospitality venues shut their doors for good, according to figures revealed last month by CGA by NIQ and AlixPartners.
A Treasury spokeswoman said: “Our decisive action helped to more than halve inflation last year, which is protecting businesses around the country from higher costs that they would otherwise have faced.
“We’ve also recently extended measures to support hospitality, including a 75% discount on business rates and freezing alcohol duty until August 2024.”
