The burden of business rates increases has weighed heavily on the industry during the past year and with the price of everything else rising, including commercial kitchen equipment and labour, we’ve grown accustomed to hearing operators lament the costs they face.
But if anyone thinks it is used far too easily as an excuse for poor performance I urge them to take a look at a recent report by Colliers International into the impact of the 2017 Rating Revaluation on casual dining chains in particular.
It gives a sobering account of just how exorbitant the rise has been, focusing specifically on three chains at the centre of restructuring headlines since the start of this year: Byron, Jamie’s Italian and Prezzo.
Analysing Business Rates Liability, Colliers estimates that Byron’s total rateable value has increased an enormous 40% since last year, taking the figure from £7.764m to £10.63m.
Some restaurants, particularly in London, are seeing massive hikes. The Pavement, SW4 saw a 253% rise in rateable value, from £51,000 in 2010 to £180,000 due to the Revaluation, and the Cut in SE1 saw something similar.
For Jamie Oliver’s restaurants, the total RV bill appears to have soared 28%, up £5.7m to £7.3m, with Brighton (up 154% from £68,000 to £173,000), Cheltenham (up 80% from £44,500 to £800,000) and Guildford (up 78% from £79,000 to £141,000) hit hardest.
And Prezzo, which this week was at the centre of headlines suggesting it is preparing a CVA that will lead to 100 stores closing, saw RV up 23% from £12.8m to £15.9m, with London outlets again most affected.
This includes a 116% rise in RV in North Audley Street (£78,000 to 169,000), 113% in Northumberland Avenue (from £168,000 to £357,500) and 80% in the Haymarket.
With the business rate multiplier at nearly 50p in the pound, it has never been more vital for chains to be sure about which outlets to keep open and which to consider closing.
Getting it wrong could leave some at the point of no return.