Quality British cuisine is at risk of being taken off the menu as pubs and restaurants grapple with increased business rates and employment costs, Tom Kerridge has warned, as new figures revealed at least three are closing every day.
Speaking to The Independent, the celebrity chef revealed even his famed business empire of eateries is barely making money in the current crisis as he laid bare the pressure faced by businesses, and called on the Labour government to do more.
It comes as hotels, cafes, restaurants and pubs face paying higher business rates following chancellor Rachel Reeves’s decision to end relief brought in during the Covid pandemic.
As first revealed by The Independent, the Treasury partially U-turned to provide a 15 per cent off rates for pubs and live music venues after huge backlash – but many claim it does not make up for the increase, while the support also does not cover hotels and restaurants.
Other factors, including increased energy bills, food costs and employer National Insurance contributions, mean some are struggling to stay open, according to industry leaders, with evidence of the scrap in the 305 closures between January and March.
“I cannot understand why anybody would open a business in hospitality right now,” said Mr Kerridge, who, after starting his first pub, The Hand & Flowers in Marlow, Buckinghamshire, now runs an estate of five pubs and restaurants. “I do not understand how somebody’s taking some form of business loan or some form of investment… I don’t understand where they see a return on that, on how they see it happening.”
The “absolutely huge” challenges he listed include business rates, food inflation, utility bills and a rise in minimum wage and National Insurance.
And the impact, Mr Kerridge said, was an erosion of passion and people-driven businesses, including the quality British cuisine they offered.
“What happens is the quality levels will drop,” he said. “We are in a position where for the last 20 or 30 years British food has been seen as something that’s absolutely outstanding. We’ve grown to a point where we have some of the most eclectic, wonderful, brilliant cooks in the country, amazing restaurants, fantastic places but what will happen if no-one will be encouraged?
“Everything will shut down and it will rapidly go backwards that the only people who be able to afford something are multinational companies that are mass producing, de-skilling, and quality levels [will] disappear.”
Mr Kerridge revealed that the changes this month would see business rates charged on his five pubs and restaurants increase by 100 per cent to £500,000. The levy for his two Michelin-starred Hand & Flowers would match the rent of his Chelsea restaurant, The Chalk Freehouse.
And while he said no “questions needed to start being asked” yet about the future restructuring of the business, he said savings had been made, including a 10 per cent cut in staff numbers by over the past year. But any plans to expand were off the table, he said.
A long-standing Labour supporter, Mr Kerridge signed a letter before the election which said Sir Keir Starmer’s party was the right choice for change to deliver growth. Over the past months, he had secured meetings with business minister Peter Kyle, and is now pushing for a reduction in VAT. “There absolutely could be a lot done” he said.
He added: “This is about community spaces. People need hospitality to be there, they need connection, they need the smiley people in the coffee shops, they need somewhere to go to celebrate… that afterwork pint that many, many people enjoy, all those spaces shut and that’ll disappear. It will have a huge adverse effect on communities and happiness within the country.”
Mr Kerridge is not alone in putting pressure on the government.
Politically, 50 Labour MPs organised by Labour Knowsley MP Anneliese Midgley, a member of the culture select committee, warned the rise in business rates presented “existential threats” to the industry.
Meanwhile, the Lib Dems have called for a 5 per cent VAT cut for hospitality ahead of the Budget last year, and Reform has said it would drop the tax down to 10 per cent.
Those in the industry have also been making their voices heard.
Last year, after the Budget announcement that business rates would increase, James Fowler, landlord of the Larder House in Southbourne, Dorset, banned Labour MPs from his premises in anger at the plan.
.jpeg)
It sparked a national campaign which saw “no Labour MPs” stickers sent out to thousands of pubs across the country. Weeks later, chancellor Rachel Reeves announced the 15 per cent reduction on business rates for pubs and music venues, followed by a two-year freeze.
Mr Fowler said that despite the partial climbdown, his rates were still going up by around a third due to the revaluation of rateable values. Parliament research estimates this year will see an average 30 per cent increase for pub rateable values, which are then multipled to produce the business rate bill.
As a result, he has plans to reduce the size of his restaurant on the back of years of cuts to staffing numbers and menu offerings. “It couldn’t be a harder time to run a restraurant right now,” he said. “We’re doing everything we can, but at every turn it feels like we’re getting hit by another blow.”
Also in Southbourne, Paul Forsdike, who owns Dicky’s Bar and Brasseire, said he feared the situation would take away creativity from British menus. Although profitable, and with an annual turnover of £1.2m, he said his bill to the Treasury comes at £338k, meaning almost a third of each £1 spent by the customer goes to the government. Meanwhile, he said, he and his business partner took a salary of £21k each.
“Restaurants will look to cut costs through what they offer,” he said. “You put chicken and salmon on the menu and you know it will go, but those other experimental dishes people also want to try, there will be less time and money for it, and that’s sad because we don’t want all our restaurants to serve up the same dishes.”
Not far away, in Burford, Oxfordshire, Andrew Joyce, who runs the Cotswold Merrymouth Inn, made the difficult decision to close the food and drink business, cutting 80 per cent of staff, to focus on events and accommodation.
The 13th Century venue, which was famed for its Sunday roasts, told customers: “Due to the very poor political and economic situation along with the additional costs imposed on hospitality by UK government, our daily food and drink business will remain closed while we undertake some changes to mitigate the extra costs and regulations.”
The climate has also impacted communities desperate to keep their pubs open. In Horncliffe, near Berwick-upon-Tweed, locals raised more than £300,000 to buy a shut-down pub called The Fishers Arms. But the village can’t find a landlord to take it on.
Further confimation of the challenges faced by the sector came this week with the report from marketing firm NIQ that showed the hospitality sector had lost more than three licensed premises a day in the first three months of this year.
A regional breakdown given to The Independent showed London and Scotland were proportionally the worst hit, with both losing 0.4 per cent of licensed hospitality premises.
On Tuesday, Dorset landlord Andy Lennox, who runs the Old Thatch in Wimborne, took his campaign for a cut to VAT to London, meeting government and business leaders to push for his case to ddrop in the levy to 13 per cent.
Mr Lennox, who runs a hospitality network group called The Wonky Table, said VAT for hospitality should be in line with Europe, where the average bill is 13 per cent. “VAT is by far the biggest tax on businesses, and is starving pubs, restaurants and hotels of profit,” he said. “We urgently need this changed to help our businesses thrive in the current climate.”
Meanwhile, Kate Nicholls, chair of UKHospitality, warned nearly two-thirds of business were expected to cut jobs as a result of rising business rates, alongside higher employment and energy costs.
She said: “Hospitality already carries the highest tax burden of any sector in the economy, and rising costs are piling pressure on a sector that supports millions of jobs and underpins local communities nationwide. Without meaningful action, more businesses will be forced to reduce hours, cut staff or close altogether.
A government spokesperson said: “We have the right economic plan – we’re reforming business rates to back hospitality, with a £4.3bn support package to limit bills rises, alongside capping Corporation Tax at 25 per cent, cutting red tape and taking action on the cost of living to boost the sector.
“Increasing the National Minimum Wage boosts pay for over 200,000 young workers, and employer NICs are lower when hiring under‑21s”.
