Restaurants warn chancellor over ‘damaging closures’

A group of restaurant bosses is warning the government it must act to avoid “damaging closures and job losses”.

In a letter to Chancellor Philip Hammond, they have asked for “root and branch” reform of business rates.

The chief executive of Bills and the chairman of pub and restaurant chain Mitchells and Butlers are among the 15 who signed the letter.

A string of chains including Jamie’s Italian and Byron have closed outlets recently amid financial difficulties.

Last week, pizza chain Prezzo became the latest to cut back, closing 94 outlets.

That amounted to about a third of its outlets and included all of its TexMex chain Chimichanga.

Barbecoa, a smaller chain also owned by Jamie Oliver, went into administration last month, while Italian chain Carluccio’s has called in accountants KPMG to advise on possible strategies to cut costs.

In the letter to the chancellor ahead of his spring statement on the economy on Tuesday, the business leaders described a “perfect storm” that has hit their sector.

They blamed “soaring business rates, rising employment costs and Brexit-fuelled inflation” for the difficult trading conditions.

Image copyright
Getty Images

“We need government action now to reduce the unnecessary costs of doing business if we are to avoid damaging closures and job losses,” the letter said.

“The sector is at a tipping point and needs focused attention now.”

According to research published last week, one in three of the UK’s top 100 restaurant groups are not making a profit.

Consumer spending power – squeezed by low wage growth and higher inflation – means consumers are reining in discretionary leisure spending in general.

Some are replacing it with home delivered meals, or ready-meals like Marks and Spencer’s successful Dine In for Two for £10.

Some analysts also argue there has been too much expansion among chain restaurants.

Speaking to the BBC last month, Roger Tejwani, from stockbrokers Finncap, said: “There is too much capacity in the market with consumers having a considerable amount of choice.”