An alarming number of hospitality businesses in Tayside have had to close their doors because of inflation, the rising cost of food, and customers having less money to spend.
Blasta Restaurant in Stanley is closing down after experiencing “the worst time in history”.
Fleming Butchers in Arbroath is due to shut down in October after nearly 100 years in business, blaming the rising prices and the cost of living crisis.
At the end of June the popular Jessie’s Kitchen in Broughty Ferry closed suddenly.
The 269 Vegan premises in Perth is closing after “not the easiest year”.
That’s just a handful of the food and drink establishments in the area which are feeling the heat.
Now Dundee and Angus Chamber of Commerce is calling on the UK Government to do more to help the industry, saying the amount of closures they are seeing is “heart-breaking”.
‘Incredibly difficult’ time
Alison Henderson, CEO of the chamber, said the pandemic recovery, the war in Ukraine and rising inflation is creating a “perfect storm” for the food and drink industry.
She said: “It is an incredibly difficult time for the whole sector.
“While hotels and events are coming back, some of it is just misplaced income from previous years.
“I feel for the industry because everything is coming at once.
“They are battling day-to-day to keep their doors open.
“Customers’ pockets are being squeezed left, right and centre too.”
She said people are cutting back at the dinner table.
“A party of four before might have ordered starters, mains, desserts and a couple of bottles of wine along the way,” she said.
“But businesses are now finding people are sharing starters and ordering more bread because it is complimentary.
“Everybody is looking at what they are spending now so often they are not ordering that second bottle of wine.”
Perfect storm for hospitality
Ms Henderson says there are lot of contributing factors including VAT bills, utility bills, Covid-related sickness rates and inflation.
She said: “Cuts to VAT were reversed for the last quarter so VAT bills have gone up.
“Utility costs have doubled, trebled, sometimes even more, and hospitality businesses are finding it difficult to get contracts now because they are seen by some utility companies as a risk.”
She added: “One restaurant I know had 11 texts from their utility company in just a few weeks, and it was all notifications of a price increase.
“There is a lot of sickness as well because staff have Covid.
“A lot of customers are cancelling as well if they are sick.
“And many businesses which survived their way through the pandemic are now being hit with the war in Ukraine and the global impact that has on the price of food and inflation.”
Call for more government support
But what is needed to stop more of these food and drink businesses closing their doors?
Ms Henderson admits there is no easy solution to the problem.
She says there are some things the UK Government could consider doing to try and make life easier for the industry in Tayside.
She said: “The industry is not asking for more money.
“But they are calling on the government to introduce things like a utility price cap for businesses.
“The government could also reduce VAT on utility bills – that would make a big difference.”
She added businesses “need to see a reduction in their costs” as they generally speaking have less money coming in these days.
She added: “With something like Eat Out To Help Out, people were getting out and spending more money.
“But the danger of that in the current economic climate with inflation running away with itself is if people spend more money, there is more trade and businesses spend more, so that puts inflation up.
“That will just exacerbate the problem.
“The solution is really difficult, they can’t just reduce corporation tax either because most businesses are lucky to even make a profit right now.”
No national government can control the global factors.”
– UK Government spokesperson.
The UK Department for Business, Energy and Industrial Strategy said a recent freeze to alcohol duties will save consumers £3 billion over the next five years.
They added the government is supporting businesses to try and improve their energy efficiency by at least 20% by 2030, which they estimate could produce savings of £6 billion.
But they also added the lower rate of VAT that was offered was only a “temporary measure”, and said “it is right our support reflects the fact the economy has reopened”.
A spokesman for the UK Government said: “No national government can control the global factors pushing up the price of energy and other business costs, but we will continue to support businesses in navigating the months ahead.
“We are supporting hospitality businesses in Scotland by freezing alcohol duty rates on beer, cider, wine and spirits and increasing the employment allowance.
“We’ve stood behind the hospitality sector throughout the pandemic with a £400 billion package of economy-wide support that saved millions of jobs.”