The profitability of hospitality businesses across the UK is plummeting with only 37% currently turning a profit, new research has revealed.
The survey, conducted by the British Beer and Pub Association, British Institute of Innkeeping and UKHospitality, shows businesses are struggling with rising costs of energy (74%) the most followed by goods (55%) and labour (54%).
The findings come almost one year after the Government released its Hospitality Recovery Strategy, which looked to increase the resilience of the sector by improving profitability and putting pubs, bars, and restaurants at the heart of plans to revitalise local economies after the pandemic.
However, the picture for hospitality businesses remains bleak, with almost half (45%) of businesses forced to reduce opening hours to avoid closing permanently and one in six reporting they have no cash reserves.
Now hospitality leaders are calling on the Government to recognise the contribution hospitality businesses can make to the economy whilst noting that less than one-third (28%) are currently considering investing in their businesses because of the challenging economic climate.
The industry wants a focus on three key priorities to get the sector back on track: tackling the current inflationary headwinds facing the sector; reforms that would unleash growth potential, and a new tax and investment regime that facilitates a resilient and productive hospitality sector.
In a joint statement the British Beer and Pub Association, British Institute of Innkeeping and UKHospitality said: “These figures are extremely worrying and demonstrate the critical situation hospitality businesses across the country are currently in. Given the chance, our industry has huge growth potential and the ability to play a critical role in the levelling up of communities in every single part of the UK, but instead we are still struggling to get back on our feet properly after a turbulent two years.
“In the past few weeks inflation has hit record levels and costs on key ingredients and utilities have rocketed, whilst consumer confidence has plummeted resulting in fewer customers in our venues. We are weathering a perfect storm, but we can’t hold on forever, we need relief as soon as possible before the cost of doing business forces venues to close for good.”