- October 21, 2021
- Comments: 0
- Posted by: admin
Customers face big rises in the cost of a meal and a drink, pubs and restaurants have warned.
Prices are rising rapidly and inflation-hit pubs and restaurants will have “no choice” but to pass them on or face closure.
Figures show food costs from wholesalers have risen by 8-12 per cent, utilities such as gas and electricity are up more than 50 per cent, and wages have increased by 13 per cent.
Since the VAT rate for the sector moved from five per cent to 12.5, many hospitality businesses have absorbed the cost to keep customers coming in, but with the return of 20 per cent set for 2022, owners are worried.
Kate Nicholls, the CEO of UKHospitality, said: “There is cost price inflation and already consumers are having to pay more for food services.
“It’s a toxic cocktail of costs and it’s overwhelming the sector, which can only absorb so much.
“The Government is making it worse by returning to 20 per cent VAT in 2022. We need to relieve pressure by staying at 12.5 per cent or prices on menus, pints in pubs and hotel rooms will rise.”
Bristol restaurant offers job candidates £250 bonus as hospitality staff crisis rumbles on
The chef Richard Corrigan, who runs several restaurants, including Bentley’s in London, said the industry is already in crisis.
He said: “Beef prices are up, lamb has doubled in price, and fish is extraordinary if you can get it.
“The wage increases are welcome because you can’t live in London on £11 per hour. But it’s everything else, and all at once.
“Deliveries are haphazard at best, getting laundry delivered to your business is a nightmare because they can’t get staff.
“Last week, we couldn’t even get wholemeal flour for our bakery. We’re not heading for a crisis. We’re in one. If VAT goes back to 20 per cent, businesses will be underwater.”
Comments from the industry come as the Food and Drink Federation chief executive Ian Wright told MPs at a select committee that hospitality firms are facing an unsustainable future.
His warnings came before the ONS said inflation is expected to rise further above the Bank of England’s target of 2 per cent for longer than previously thought.
Mr Wright told i consumers will suffer: “The recent ONS figures, highlighting a slight drop in inflation rates, appear to reflect the impacts of the Government’s ‘Eat Out to Help Out’ scheme from September 2020, where prices increased sharply.
“The food and drink industry is experiencing very sharp rises in costs across the board – wage increases, ingredient costs, raw materials, transport and shipping, for example, are all contributing factors to the knock-on effect of high inflation in the hospitality sector.
“As a result, we expect wider food retail prices to continue to increase into 2022.”
A Treasury spokesperson said: “The hospitality and tourism sectors have benefited from extensive support over the pandemic through our Plan for Jobs, with the furlough scheme, grants, tax cuts and deferrals.
“We went long with our support, and that’s why hospitality firms can continue to access a reduced of VAT and rates relief until March 2022 – and our Recovery Loan Scheme
“We’ve always been clear that the lower rate of VAT was a temporary measure to support businesses as they recover from the pandemic.”
All rights reserved. © 2021 Associated Newspapers Limited.