Top brass from some of the country’s leading restaurant chains have written an open letter to Prime Minister Theresa May in a desperate bid to alleviate the enormous cost pressure the industry faces in 2017.
The letter, published in last night’s Evening Standard, warns that some chains with central London sites face the prospect of a 30% to 40% hike in business rates, while unfair VAT rates are creating further “anxiety” for operators.
A number of formidable industry names have signed the letter, including Leon CEO John Vincent, Yo! Sushi CEO Robin Rowland Pizza Express CEO Richard Hodgson. A further 19 other restaurant bosses from chains such as Carluccio’s, Wagamama and Wahaca have also added their signatures.
The letter reads: “We know Theresa May appreciates the contribution of the hospitality industry but we are not sure the Government understands the commercial pressures we face. We pay millions of pounds in VAT, business rates, national insurance and other taxes. In other countries, taxes are cut for the hospitality sector.
“The weak pound has led to food costs increasing by about five per cent. Those of us with central London sites have seen rents soar and an increase of 30-40 per cent in business rates. Our industry is also penalised because restaurants and pubs have to charge 20 per cent VAT. The government also wants a new apprenticeship tax and increase the National Living Wage to £7.50 next year and towards £9 by 2020. We back this — we want to pay our people well. However, labour costs represent around 30 per cent of our revenue and we need balance elsewhere in the tax regime to do that.
“We want to tell the PM of the anxiety over our sector if we lose significant numbers of our teams, many of whom come from Europe. We want her to consider a reduction in VAT, extending transitional relief on business rates or reducing national insurance contributions.”
Leon’s John Vincent told the paper separately that some of his sites face a “huge” hike in business rates when the new valuations are phased in from April 2017.
“London’s restaurant chains are being squeezed as never before and we really need some respite, particularly from the huge hike in business rates. The Leon in The Strand alone will see its rates go up by £24,000 next year. That’s why we’re joining together with other restaurants to make this call for action. The Government needs to listen or restaurants will close and thousands of people will lose their livelihoods.”
Restaurateurs also face higher prices on ingredients bought from Europe due to the collapse in the value of the pound since June’s Brexit vote, according to the report. It said some products have become 20% more expensive.