The U.K.’s restaurant and hospitality industry is asking for financial help as it faces higher taxes and rapidly rising seafood prices due to inflation and impending Russian sanctions.
The U.K. government issued sanctions against Russian goods – including the installation of a 35 percent tariff on whitefish – in March. In April, a government official said the sanctions had been “delayed while we sort some technicalities,” but noted “we are totally committed to them,” per Politico.
On 12 May, several industry insiders told The Grocer the imposition of the whitefish tariff was “imminent,” and one said the tariffs could “make cod and chips more expensive than wagyu beef.” The tariffs will put additional pressure on U.K. seafood processors and restaurants already dealing with the fallout from loss of business during COVID-19 shutdowns.
The U.K.’s iconic fish and chip shops, in particular, face an existential crisis as a result of the current economic situation, according to National Federation of Fish Friers President Andrew Crook. Fish-and-chip shops have been forced to raise prices, but Crook does not yet know the overall impact on sales and traffic.
“It’s difficult to judge what effect the price increases are having in trade, as we have had half-term and bank holidays, but we are expecting a drop-off in trade as the cost-of-living crisis starts to bite,” he said. “We are currently in a bit of a strange period, as some shops seem to be hoping prices are going to fall, which they are not.”
Seafood restaurants have begun to offer alternatives to Russian cod and pollock with “some” success, Crook said. At his own Euxton, U.K.-based Skippers of Euxton fish-and-chip shop, Crook added hake to the menu “as a cheaper option and sea bass as a more expensive choice, as it helps to put cod and haddock [prices] in perspective.”
As prices rise, seafood vendors are getting “creative” with payment terms, including 12-month repayment options, according to Crook.
Seafood restaurant operators’ primary concern is the U.K. government’s recent increase in the value added tax (VAT) from 12.5 percent to 20 percent.
“It will be when businesses have to pay their corporation tax and VAT that we start to see shops closing in numbers, we expect, as they simply will not have the money to meet their commitments,” Crook said. “Without reform of the VAT system and better policing of it, many good fish and chips operators are going to lose their businesses.”
Hospitality is "faced with a cliff edge, with an increase in national insurance, an increase in the national minimum wage, and a substantial increase in business rates,” Charlie Gilkes, the founder and owner of restaurant operate The Inception Group, said. “This is on top of soaring energy and food costs.”
New government measures aimed at helping restaurants and hospitality businesses aren't going far enough, according to UKHospitality and the National Federation of Fish Friers.
The recently proposed Leveling Up and Regeneration Bill aims to provide local U.K. leaders with the powers to revitalize town centers, according to The Drinks Business. However, the measures will do little to “bring immediate relief to the pains that hospitality businesses are feeling in the short-term, so we urge the government to ensure that regulatory reliefs come as soon as possible to help struggling businesses stay afloat,” UKHospitality CEO Kate Nicholls said in a press release.
Nicholls praised a proposal to trim red tape from the pavement-licensing process, which she said would allow more restaurants to operate outdoors year-round.
“[The permits enabled] businesses to trade when they would otherwise be forced to close or restrict their opening hours. These outdoor spaces also benefit town and city centers, enabling them to enjoy the sort of outdoor experiences available elsewhere, and helping local economies recover faster, contributing to leveling up,” she said.
Nicholls also said UKHospitality found it encouraging that the government is taking action to simplify and update its business rates system, “but this needs to be combined with concrete action to reduce the overall burden of rates on hospitality,” Nicholls said.
"Cutting the rates hospitality businesses pay will play a crucial role in regenerating high streets and leveling up the nation,” she said.
Photo courtesy of yackers1/Shutterstock
