Fat Cat Restaurateurs

“Fat Cats” and “Restaurateurs” are not words that are usually found together.?And yet, the disdain in which government expects the restaurant sector to deal with the coming tsunami of cost pressures makes me think that Boris is confusing apples with Apple, and big tech with big steaks.

But let’s roll back to the good old bad days.?2019.

2018 and 2019 were the anni horribili for the restaurant sector.?A labour intensive and small margin industry found it tricky to navigate the perfect storm of a steep rise in business rates, upward only rent reviews and minimum wage increases.?Throw in over competition driven by drunken fuelled VC expansion, a dip in consumer confidence caused by Brexit and the spectre of Jeremy Corbyn and it was not difficult to predict the outcome.?In some cases, double digit declines in turnover, coupled with rising costs, caused the traditional restaurant estate “tail” to become the “head” and wholesale deforestation occurred leading to the collapse of previous star players such as Jamie’s Italian, Byron, Prezzo, Carluccio’s, GBK, Cau, and Handmade Burger.

And then we had COVID.?And it was awful.?Still sweating from the previous two years, restaurateurs went to the mattresses, reinvented, hustled and thankfully, many survived.?This was partly because Rishi came along with a massive sticky plaster called furlough, and threw in some grants, a welcomed VAT reduction and business rates relief.?He kept the sector on life support.

But now, that plaster is being ripped off and sadly, the sore underneath is bigger than it was.

The challenges of 2019 are not quarantining in an airport hotel.?They are still very much present, but in addition, the sector now finds itself with a depleted workforce, wage inflation so astonishing that it’s almost comical, soaring energy costs (one operator told me that his utility bills are 600% up on 2018) and the start of debt repayments racked up from surviving COVID.

For many, the only solution is to try to pass on the costs to the consumer.?And this is a dangerous game.?Only Salt Bae can get away with ￡600 steaks.?History shows us that price rises can easily backfire and lead to a decline in sales.

So, if government wants the sector to survive and prosper, to grow and to employ, it needs to remember that restaurant owners are not Fat Cats.?The sector needs support.?It is inexcusable that the business rates problem has still not been resolved.?This is not just an insurmountable burden for small restaurants with rateable values under ￡50,000 but for all operators, big and small. It needs to act NOW while it still can.?The VAT rate on food needs to be frozen at 12.5% to allow time for the sector to re-calibrate and continue to be one of the largest sector employers in the country.

With support comes confidence.?With confidence comes investment.?With investment comes jobs.?Dear Boris - Help us, to help you.