EXCLUSIVE Restaurant's MP plea: we're on our knees
By Simon Hacker | 20th July 2023
A Cheltenham restaurateur has written a heartfelt open letter to the town's MP in a plea for a VAT cut and more help for his beleaguered business.
Gareth Fulford, chef patron of the Purslane Restaurant, approached Punchline-Gloucester.com to share his letter to his MP, Alex Chalk, at a time when hospitality faces historic economic challenges.
Mr Fulford, who set up the Purslane on Rodney Road 11 years ago after sinking more than £100,000 into its refurbishment, said he sent the letter because "hospitality is still massively under the cosh".
While Wednesday's inflation figures proved to be better than expected , he added, "we are certainly by no means out of the woods yet".
Mr Fulford said: "The Bank of England announcement on whether to stick or raise interest rates again will be a good sign for what they think lies ahead. Grocery inflation is still at almost 15%... and we will need to see more from the government to help the sector if there are not to be many more business casualties."
As yet, Mr Fulford has had no reply but he urged the public to reach out and support local, independent restaurants: "We have eight people employed here and when people do go out, I urge them to support business like ours."
Mr Fulford's letter, which we reproduce below, highlights specific areas of difficulty, mapping out the salami slicing of every pound spent by customers and the government's lack of any productive dialogue with UK Hospitality trade body.
● As co-signatories, the letter is also being sent as a collective plea from Portia Brown, manager of Pyesta Filipino Restaurant in Clarence Road, Jonas Lodge, head chef and owner of Chester Walk's GL50 and Stephanie Ronssin, owner of wine and cheese bar Domaine 16, in Regent's Street.
And as echoed in Punchline's coverage of businesses struggling to meet energy costs, the letter includes painful details of the Purslane's "crippling" utility bills, charting a monthly rise of more than 300%.
Punchline-Gloucester.com says: So far, the government's menu for hospitality seems to be all about hard cheese and jam tomorrow. It needs to step in – and quickly – if this vital sector is going to remain healthy and deliver what it clearly can as a crucial pathway towards economic recovery. If you are working in the hospitality and entertainment sectors and have a view to share, email Mark Owen at firstname.lastname@example.org .
OPEN LETTER TO ALEX CHALK MP
We have reached out to you before, and now, again, find ourselves writing about the dire situation facing hospitality in Cheltenham in 2023.
In the three years since the start of the pandemic, the number of independently owned hospitality businesses has shrunk by a massive 14.1% across the UK. The licensed sector as a whole has 13,793 fewer premises than it did in March 2020.
Unlike well-resourced group operators, independents are mostly operating at a loss and surveys show approximately 34% of us don't expect to survive the year. We put everything into our businesses, financially and emotionally but when the money runs out...
Every closure represents job losses throughout the whole supply chain from wholesaler to grower, fisherman to farmer. There are 3.5m people employed across the sector making it the third largest employer in the UK.
It also means a reduction in tax receipts for the treasury whether that be VAT, PAYE, NICS or Corporation Tax.
For every £1 spent in a restaurant the government will take almost 30p in tax revenues.
Many independents use only fresh produce, so every food item we buy is 0% VAT rated and there is very little to claim back.
If, by some miracle we manage to make a profit, that then will also be taxed.
Many also took out bounce back loans to survive the pandemic. Ultimately the government will also foot the bill if these businesses default. Yet again UK Hospitality are lobbying for extra support, but with no result.
Whilst the headline rate of inflation has finally fallen today to just below 8%, food inflation is still running at almost 15% with some products up further: cheese for example is almost 33%.
Utility bills are absolutely crippling.
For example, Purslane's electric bill in 2020 when open 5 days a week was, on average, £650 per month. It is currently £2000 per month, and we are on site one day a week less. It is just not viable to open the doors unless we are busy so have had to reduce our opening hours.
All of these issues make once healthy businesses more and more untenable. We are stuck between a rock and a hard place with the need to try and remain a viable business whilst also not alienating customers with price rises.
While all our costs are going up, we are also seeing a massive decline in footfall and spend.
Everyone is experiencing the cost-of-living crisis. The public's disposable income has been swallowed up with interest rate and mortgage cost rises alongside food and energy price increases.
The first thing most people cut back on is going out to eat and drink, taking a weekend away, therefore preventing money from being put back into the economy.
Why should hospitality be supported? Over the past six years hospitality has increased its annual economic contribution to £93bn. The Office for National Statistics cited hospitality as one of the biggest drivers of job growth after UK employment hit a record high of 33 million.
UK Hospitality chief executive Kate Nicholls said it was "essential" politicians recognised the importance of the industry and tackled issues such as energy costs, food and drink price inflation and labour shortages that were stifling growth.
How can you help? An immediate cut in the 20% VAT rate for hospitality and tourism businesses would go a long way to preventing a tidal wave of job losses and closures. It was done during Covid and the issues facing hospitality now are at least if not more severe as then.
In comparison to the UK, Ireland has a VAT rate of 9%, France and Italy both have a rate of 10% and inflation across the Euro zone is now much lower than in the UK. These countries know how key hospitality is to their economies and strive to protect that income stream and job pool.
We urge you to take these issues to parliament and lobby your peers to save an industry that is on its knees.
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