Hospitality sector battles for survival during cost of living crisis - Greg Wright

During a year when the political world was turned upside down, many operators of pubs, hotels and restaurants had to burn the midnight oil just to survive.

Walk through the streets of any Yorkshire town or village and you are likely to see signs of decline; hotels boarded up and seeking a new owner, pubs which have finally given up the ghost and restaurants which face a constant battle to find staff.

A recent study concluded that restaurant company insolvencies increased by 59 per cent over the past year. The total has risen from 984 in 2020/21 to 1,567 in 2021/22, according to advisory firm Mazars.

In the three months to the end of November, the number of restaurant companies becoming insolvent rose to 453 from 395 the previous quarter. As well as increasing food and energy costs, restaurants have been hit by shortages of staff, particularly for skilled roles such as chefs. Some restaurants have been forced to cut their trading hours to save on the cost of energy as bills soar.

Speaking before the festive season began in earnest, Rebecca Dacre, a partner at Mazars, said: “Insolvencies of restaurant businesses are now happening at a far faster rate than during Covid.

“It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand. Most restaurateurs have not seen this combination of negative factors before.

“The Christmas trading period is usually a bumper period for hospitality businesses. However, restaurants will be bracing themselves for a very tough winter and many face a real battle to keep afloat.

“There’s a certainty of further insolvencies if they don’t receive much more support from the Government, but the chances of the Government fully turning on the taps is low.”

Earlier this month, the owner of Franco Manca and The Real Greek reported shrinking profits and a drop in visits to its city centre restaurants during the rail strikes.

Hospitality experts have warned that December is also set to have been a “challenging” month during a period of intense inflationary pressures.

The World Cup might have provided shafts of light amid the gloom for some pubs, as many fans decided to watch matches in a convivial setting.

However, Karl Chessell, a director of hospitality operators and food at CGA, warned that restaurants and bars are trading way behind the rate of inflation, and consumer spending is under strain.

He added: “Spiralling costs leave many hospitality businesses extremely fragile, and with little respite in sight there is a strong case for urgent and targeted Government support to protect businesses and jobs.”

The prospect of large scale Government intervention seems very slim, with the Chancellor Jeremy Hunt warning that decisions of “eye-watering difficulty” will be needed to restore market confidence.

So, this festive season, do visit your local pub, restaurant and hotel. They are an endangered species. We will all miss them when they’re gone.

Greg Wright is deputy business editor of The Yorkshire Post