Sacha Lord warns hospitality sector could ‘collapse’ without Government support in the Autumn Budget

The night-time economy adviser for Greater Manchester said the latest figures showing a worrying rise in hospitality businesses becoming insolvent.

Greater Manchester night-time economy adviser Sacha Lord has warned the hospitality sector could “collapse” without urgent Government support in the Autumn Statement.

Mr Lord said the latest figures showed an alarming rise in restaurants and other food outlets going to the wall amid spiralling prices and the cost of living crisis. Analysts of the latest figures of the hardships facing hospitality have made it clear that Greater Manchester is experiencing the same problems as other parts of the country.

Mr Lord warned that the sector is finding it harder and harder to make ends meet and said politicians have to step in to help to prevent further closures and job losses.

What has Mr Lord said?

Mr Lord spoke out after figures released from The Insolvency Service showed the number of restaurant and food outlets going into liquidation nationally increased 46% in the quarter to September 2022, from 108 in June to 158 by the end of August.

He said: “The data we have received today is just the tip of the iceberg, and shows a very worrying trend which we believe will only get worse over the months to come. An increase of nearly 50% in insolvencies in three months shows the sector in an extremely worrying state and it is now entering winter in freefall.

Sacha Lord. Photo credit: Greater Mancunians Project

“There is a severe lack of confidence among operators, particularly those running small independent businesses, and this has been exacerbated by the confusion over possible business support and ongoing u-turns. The implementation and subsequent reversal in the freeze on alcohol duty is just one example where planning has been made impossible, adding to the despondency and anxiety across the board.”

“The stark truth is that hospitality businesses are paying more for ingredients, energy and day to day business needs than they were this time last year, and we are seeing venues shutting due to financial difficulties on a daily basis. The sector urgently needs support through a reduction in VAT and through business rates relief, both measures that will undoubtedly offer operators a lifeline.”

What else has been said?

Gareth Hunt, licensed insolvency practitioner at RPG Chartered Accountants, said: “We are seeing more smaller and medium businesses across the board in Greater Manchester and the surrounding areas beginning to struggle with ongoing financial commitments, and within our insolvency team we have had a number of restaurants, fast food outlets and pubs entering into liquidation this year.

“The main catalysts of these closures have been the increase in business costs and gas prices, interest rates rises, reduced footfall and unfortunately we are wholly expecting this trend to rise further, over the winter months in particular.”

The figures echo separate research by UKHospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster, which showed that 35% of operators were expecting to be operating at a loss or be unviable by the end of the year, with 96% experiencing higher energy costs and 93% facing food price inflation.

Hospitality venues in Manchester that have shut their doors in recent months include vegan diner V-Rev and fellow plant-based eatery Frost Burgers as well as Chorlton restaurant The Creameries.

Businesses have given a variety of reasons for being unable to carry on, including higher energy bills, the rising costs of ingredients and difficulty recovering after the Covid-19 pandemic.