Restaurant and casual dining chains are joining retailers in their struggles against the “onerous” business rates regime, with some fall-out in the high street highly likely, Colliers International has said.
With the negative impact of the 2017 Rating Revaluation hitting casual dining chains, the property agency said that rising rates had “substantially” added to their costs as it revealed just how dramatically bills have gone up.
Byron recently announced that it may close some restaurants as part of its restructuring, and was asking landlords of 20 restaurants to agree to a 55% cut in rent for six months, while Jamie’s Italian closed 12 restaurants following a £10m loss last year. Prezzo is also looking at restructuring and reducing its outlets.
Analysing some of the chains’ Business Rates Liability, Colliers estimate that Byron’s total rateable value has increased 40% with the 2017 Rating Revaluation, increasing from £7.764million to £10.63 million, with some restaurants, particularly in London seeing some massive rises.
The Pavement, SW4 saw an enormous 253% rise in rateable value, from £51,000 in 2010 to £180,000 due to the Revaluation, and the Cut in SE1 saw a crippling 283% rise from £28,500 to £133,000. Indeed, London and Greater London restaurants seemed to show the biggest rises in RV.
Turning to Jamie Oliver’s Restaurants, the total RV bill appears to have risen 28%, up £5.7 million to £7.3 million with rises highest in Brighton (up 154% from £68,000 to £173,000), Cheltenham (up 80% to from £44,500 to £800,000) and Guildford (up 78% from £79,00 to £141,000).
And Prezzo saw RV up 23% from £12.8 million to £15.9 million, with again London outlets most affected: a 116% rise in RV in North Audley Street (£78,000 to 169,000) and in Northumberland Avenue a 113% rise (from £168,000 to £357,500), and the Haymarket restaurant saw an 80% increase also.
Any outlet seeing a decrease in its rateable value was very much in the minority following the Revaluation.
And casual dining is not the only sufferer. Last week French chef Raymond Blanc’s restaurant venture Brasserie Bar blamed the business rates hike following the 2017 Revaluation for adding to “an increasingly hostile trading environment.” The restaurant business had seen a 12% spike in its business rates, which alongside higher debt payment pushed it further into the red.
John Webber, head of business rates at Colliers, said: “Several dining chains are now suffering from the same woes as the high street retailers who are also seeing reduced footfall as consumer confidence falls, diners cook at home or have take-aways, whilst inflation rises impact on costs and wages rise.
“With the business rate multiplier so high at nearly 50p in the pound, property costs are therefore increasingly becoming an important factor as chains decide which outlets to keep open and which to consider closing. Many companies are now asking their landlords for a reduction in rent as the physical costs of running a property become an increasing burden. Business rates are playing their part in the difficulties as some of the massive rises for particular restaurants show, particularly those in London.”
With many former void retail units were taken up by restaurants, which are now finding the current environment tricky, Mr Webber said it was difficult to predict what the high street is going to look like going forward.
“Moving to three-year business rates revaluations is all well and good, but this won’t impact until after 2022. We could be seeing a significant change on the high street landscape in the meantime if nothing is done to support it. The government must act now- to properly reform the system and bring the multiplier down.”