Restaurants are being hit by a ‘perfect storm’ warns boss of one of Suffolk’s leading hotel and restaurant brands
- Credit: Archant
A staggering 10,000 workers in Britain’s restaurants lost their jobs during 2018, in a tumultuous year for the casual dining sector.
According to the Centre for Retail Research, 10,413 jobs were lost this year, amounting to 30 people a day.
Restaurants have been battling stagnating sales, overcapacity and rising costs which saw a host of familiar high-street names such as Gourmet Burger Kitchen, Carluccio’s, Prezzo, Chimichanga, Byron and Jamie’s Italian close stores, seek rescue deals or enter administration.
Paul Milsom is managing director of Milsom Hotels, and his family business operates Maison Talbooth, Le Talbooth and Milsoms in Dedham, as well as the Pier in Harwich and Kesgrave Hall in Ipswich. He claims the recession that has hit the branded restaurant sector is partly down to “over-expansion and over-expectation of what they can deliver”.
“One of the things that has really helped the high street is the restaurants that have come in to replace shops shutting down, but of course they are the ones now bearing the brunt from business rates,” he says. “Investors are suddenly finding out that there isn’t the money they thought there was in restaurants.
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“The storm we have hitting the high streets is very troubling. At some point, there is going to have to be some serious help.”
Mr Milsom explains that the issues facing his own business are “not high street driven” - “we are nimble and lucky not to be in that situation,” he adds. But he describes the way business rates are being dealt with in hospitality as “a travesty”.
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Mr Milson’s own business rates shot up by 60% for the Pier in Harwich in 2017, and by 55% across all his businesses. He appealed the rate rise at a rates Tribunal just before Christmas and is now “awaiting the result nervously”.
Property taxes for restaurants paid via businesses rates in England and Wales rose 23% to £564.7 million for the 2018 financial year, a two-year hike of £106.64 million since rates were revalued in April 2017, according to property advisory group Altus.
“To have such a high level of tax just to open your doors is difficult and it needs to be shifted to other areas of your business, otherwise you will find people won’t bother to open their doors because it won’t be worth it,” says Mr Milsom.
The Centre for Retail Research forecasts that a further 10,950 jobs will be lost across the casual dining sector in 2019, with independent restaurants being hit the hardest.
The Centre’s director Professor Joshua Bamfield said: “Many of the large chains have already made cuts and, in 2019, we expect the smaller and independent restaurants to bear the weight of the losses.”
Mr Milsom claims that the other key issue facing his industry is the recruitment of staff post-Brexit.
“In our sector, we have this perfect storm created not just by business rates but by the political decision over what staff can come in after Brexit,” he says.
“In restaurants up and down the country you hear lots of overseas voices, particularly from the eastern Block. It’s challenging and the government could solve that by bringing in a visa system for people from all over the world, people from India, Sri Lanka, Africa or New Zealand. At the moment, those people are excluded from coming here (to work in hospitality). It shouldn’t actually be a problem if the politicians could understand you are not going to be able to get British people to do certain jobs in the economy, because they just don’t want to do them, they believe them to be beneath them.”