Michelin starred celebrity chef warns of restaurant closures after Budget tax hikes
A MICHELIN-starred celebrity chef has warned of restaurant closures after Labour’s Budget tax raid.
Tom Kerridge, who owns The Hand and Flowers in Buckinghamshire, said he is “frustrated” by the measures after voting for Labour at the general election.
He told Politics With Sophy Ridge that the hospitality industry is already “massively under pressure”, with many struggling to stay afloat.
Kerridge, whose pub became the first to be given two Michelin stars, said there’s been a lot of “business frustration” following the Budget.
He said: “There will be a huge amount of closures.
“We’ve already got high-profile names and Michelin-star restaurants that have decided to shut their doors.
“And when that starts to happen, it does begin to filter down.”
He went on to add that there was a “huge amount of pressure” for restauranteurs “behind the scenes” due to rising costs.
It comes as the sector is gearing up for Christmas, one of the busiest times of the year for hospitality.
Kerridge said the holidays may give the sector a “false sense of hope” but once the New Year rolls around pressures would mount again.
It follows Chancellor Rachel Reeves’s announcement in the Autumn Budget, where she revealed she would increase National Insurance contributions (NICs) and the National Living Wage.
Employers currently pay NICs for most workers earning more than £9,100 a year.
The sum they pay is the equivalent of 13.8% of the employee’s earnings above that threshold.
It’s estimated that the move will raise £25billion – the equivalent of around £800 per employee for each firm.
At the same time, the minimum wage will rise to £12.21 an hour next year, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40.
BUSINESS FURY
The Budget measures have sparked fury from a raft of businesses who have warned the tax increase for businesses could lead shoppers to pay more at the till.
More than 70 businesses, including Tesco, Asda and Sainsbury’s, have told Rachel Reeves in an open letter that the changes announced in last month’s Budget mean price hikes are a “certainty”.
The changes come into effect next April.
So far, retailers including Greggs, Toby Carvery owner Mitchells and Butler and Wetherspoon have all warned of price rises.
Roisin Currie, chief executive at Greggs, said the measures rolled out in the Autumn Statement would put pressure on prices, though is likely to be only “pennies”.
On average Greggs customers spend £4 at its stores and this is forecast to rise marginally.
All Bar One owner Mitchells & Butlers (M&B) told The Sun the price of pints could rise by between 10p and 15p.
The group, which also owns brands including Toby Carvery, said higher wage expenses are “by far the most significant increase” in its cost base following moves announced in last month’s Budget.
HOSPITALITY CLOSURES
The cost of living crisis has placed pressure on many food and drink chains.
Businesses had been struggling to bounce back after the pandemic, only to be hit with soaring energy bills and inflation.
Multiple chains have been affected, resulting in big-name brands like Wetherspoons and Frankie & Benny’s closing branches.
Some chains have not survived, Byron Burger fell into administration last year, with owners saying it would result in the loss of over 200 jobs.
Pizza giant, Papa Johns also said it would shut down 43 of its stores.
Tasty, the owner of Wildwood, said it will shut sites as part of major restructuring plans.
Why are retailers closing stores?
RETAILERS have been feeling the squeeze since the pandemic, while shoppers are cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to shopping online after the pandemic are also taking a toll, and many high street shops have struggled to keep going.
The high street has seen a whole raft of closures over the past year, and more are coming.
The number of jobs lost in British retail dropped last year, but 120,000 people still lost their employment, figures have suggested.
Figures from the Centre for Retail Research revealed that 10,494 shops closed for the last time during 2023, and 119,405 jobs were lost in the sector.
It was fewer shops than had been lost for several years, and a reduction from 151,641 jobs lost in 2022.
The centre’s director, Professor Joshua Bamfield, said the improvement is “less bad” than good.
Although there were some big-name losses from the high street, including Wilko, many large companies had already gone bust before 2022, the centre said, such as Topshop owner Arcadia, Jessops and Debenhams.
“The cost-of-living crisis, inflation and increases in interest rates have led many consumers to tighten their belts, reducing retail spend,” Prof Bamfield said.
“Retailers themselves have suffered increasing energy and occupancy costs, staff shortages and falling demand that have made rebuilding profits after extensive store closures during the pandemic exceptionally difficult.”
Alongside Wilko, which employed around 12,000 people when it collapsed, 2023’s biggest failures included Paperchase, Cath Kidston, Planet Organic and Tile Giant.
The Centre for Retail Research said most stores were closed because companies were trying to reorganise and cut costs rather than the business failing.
However, experts have warned there will likely be more failures this year as consumers keep their belts tight and borrowing costs soar for businesses.
The Body Shop and Ted Baker are the biggest names to have already collapsed into administration this year.