Independent hospitality businesses at risk of 'becoming an endangered species’

Independent hospitality businesses are at risk of becoming an “endangered species” as rising costs make it more difficult to cover their bills.

Andrew Crook, owner of Skippers fish and chip shop in Euxton and president of the National Federation of Fish Friers (NFFF), said operators could face a choice between paying suppliers, tax, or rent.

He told The Caterer: “With the inflationary prices, the money that we’re usually building up for rent and for VAT just isn’t there, because it’s going towards paying our suppliers. Everywhere we look, we’re getting squeezed.

He said there needed to be a “long-term strategy” around lowering VAT as opposed to the “sticking plaster” approach that has been taken so far. “A lot of what’s going on is beyond anyone’s control. The government can’t control inflation and fuel costs. The one thing they can control is [VAT].

Crook added: “As an independent business, we’ve got more pressure. All the big chains are looking to expand because they can borrow money easily. Small independent businesses just don’t have that. Unfortunately, we’re in danger of becoming an endangered species.”

Rent worries

It comes after a survey of 200 businesses by commercial property restructuring specialist Cedar Dean found 46% were considering insolvency.

Some 54% thought their current rent was unaffordable and a quarter of independent operators said they were considering arbitration as a means of resolving rent debts accumulated during the pandemic.

A legally binding arbitration process to settle disputes between eligible tenants and commercial landlords was introduced after the end of the rent moratorium on 25 March. The general moratorium protected commercial tenants from eviction during the pandemic.

Speaking in March, business minister Paul Scully said: "Landlords and tenants should keep working together to reach their own agreements where possible using our Code of Practice to help them, and we’ve made arbitration available as a last resort.”

However, Martin Whelan, owner of Whelan’s Pubs, said it would be difficult for landlords and operators to reach a compromise when finances were already strained.

He said: “Everyone is feeling the pinch, and this is having a knock-on effect. If the punter doesn’t have the pound, they can’t spend it. To keep going we need to bargain for 30% of profits being wiped out, that is simply a fact.”

David Abramson, chief executive of Cedar Dean, said: “UK businesses need additional support to stay solvent, they need fairer rents and flexible landlords who are willing to support their tenants with sustainable leases, who understand the amount of pressure tenants are now facing.”

*Image: Wirestock Creators / Shutterstock *