Cost-of-living crisis: NI hospitality facing financial ‘cliff edge’ as spiralling costs fuel closure fears

Northern Ireland’s pubs, clubs and restaurants are facing a financial “cliff edge” due to soaring costs, with fears of widespread closures this winter as skyrocketing inflation bites.
Hospitality Ulster chief executive Colin Neill said the current situation is worse than anything the pandemic threw upHospitality Ulster chief executive Colin Neill said the current situation is worse than anything the pandemic threw up
Hospitality Ulster chief executive Colin Neill said the current situation is worse than anything the pandemic threw up

That is the view of Hospitality Ulster chief executive Colin Neill, who added his voice to those calling for greater government intervention to avert what he described as a looming “catastrophe” for the industry in Northern Ireland.

He was speaking to the News Letter as bosses of six of the UK’s biggest pub and brewing companies signed an open letter to the government urging it to act in order to avoid “real and serious irreversible” damage to the sector.

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Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan and St Austell Brewery are all sounding the alarm today.

Nick Mackenzie, chief executive officer of 2,700-strong group Greene King, said one tenant has seen their energy bill jump £33,000 for the year.

He said: “While the government has introduced measures to help households cope with this spike in prices, businesses are having to face this alone, and it is only going to get worse come the autumn.

“Without immediate government intervention to support the sector, we could face the prospect of pubs being unable to pay their bills, jobs being lost and beloved locals across the country forced to close their doors, meaning all the good work done to keep pubs open during the pandemic could be wasted.”

Mr Neill, meanwhile, gave his view on the open letter.

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“I think it’s fair to say that letter is no exaggeration – we are facing a cliff edge,” he said.

“We thought Covid was the worst thing that could ever happen to us in terms of the financial impact, but the financial situation here is much worse than what Covid ever brought us to.

“Costs are spiralling beyond control. We would need to increase turnover by probably around 25% just to stand still. You look at energy costs – on the domestic side it’s bad but on the business side they are up, three, four hundred per cent and more.”

In England, businesses are calling for an energy price cap to be extended to businesses.

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In Northern Ireland, there is no price cap. Instead, the Utility Regulator seeks to ensure companies do not make excessive profits.

Mr Neill said: “Even the best operators in the Province are talking about trying to break even. There is no doubt [energy price increases] will be catastrophic. We have seen the odd business close early.

“We have seen people saying they are shutting up shop because they can’t make money and there is no point in getting into debt.

“That will scale up unless we see government intervention.”

He also warned that the cost-of-living squeeze faced by households would have knock-on impacts for businesses in the hospitality sector.

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“Our consumers have less disposable income because all their costs are going up – their heating, their electric, their food, their children going back to school so uniforms and all of the stuff that ordinary households have to deal with,” Mr Neill said. “So they have less money to spend on going out.

“Hospitality as an industry is at the end of the distribution of discretionary spending.

“Disposable income in Northern Ireland is less than half the average uin GB, and our prices are being pushed and pushed.”

He added: “Normally what happens in a recession is the middle ground gets squeezed – the top end has loads of money, but the middle ground pulls back and maybe they will only go out once a month, they will go and get a takeaway and a carry-out instead.

“Now you’re seeing the takeaways gouing out of business.”

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Asked if, without government intervention, Northern Ireland’s high streets could soon be empty Mr Neill said: “Yes, we will see that, and I know that might sound like scaremongering. I know that during Covid I said we could see business close and we didn’t – because government intervened and we are really grateful for that intervention. They saved the majority of our high street by intervening. But it would be an absolute crime not to intervene now, after all of that money was put in to save them to let them go to the wall now.

“We are rapidly running out of road. We would need to be charging an extra 25 or 30% from what we were in 2019, and people can’t afford it.”