Hospitality crisis in NI as overheads rise by more than 80% in one year

Data collected across the UK shows that the energy crisis in particular is rapidly pushing bars and restaurants to breaking point.

The situation in Northern Ireland could be even worse than the UK as a whole as the province is not benefitting from a 75% business rates reduction on offer in GB.

Willie Jack, the owner of the Duke of York and the Harp Bar in Belfast, said the trading conditions in Northern Ireland are already “extremely unfair” due to lower VAT on enegry bills and lower corporation tax across the Irish border.

He said: “We have very high rates, we have unfair competition from down south, so we are annoyed that we don’t have a level playing field. It’s not surprising that a lot of licencees are selling their licences to supermarkets – all over the province pubs are closing.”

According to industry bodies in all regions of the UK, the data collected “revealed the extent of the current turmoil facing the industry”.

Roger Pollen of the Federation of Small Businesses NI said increases in the price of energy, food and labour costs mean business owners are “getting hit from all angles”.

The latest data was collected by CGA by NielsenIQ on behalf of the British Institute of Innkeeping, UKHospitality, the British Beer and Pub Association and Hospitality Ulster.

​The pubs, bars and restaurants surveyed revealed their average bills have surged 81% over the past year as firms make further pleas to the government for support.

Less than a third of hospitality businesses are now optimistic about their future.

The research showed that 29% of hospitality businesses said they feel optimistic about the next 12 months.

Business owners said they are particularly concerned about energy costs, with 86% of firms saying it was a worry.

It comes around a year since energy bills rocketed after the Russian invasion of Ukraine sparked a sharp uptick in gas prices.

As a result, many firms were forced into long-term fixed-rate contracts last year which have weighed on profitability and resulted in closures.

Willie Jack has been a licencee for 38 years and senses the urgent need for politicians to implement support measures.

He said “it was a lot tougher” to keep a bar going through the worst of the Troubles, but feels the chance to build a better, more vibrant future, is being squandered.

"We have an opportunity to improve the city centre, to improve the whole of the province, but they are not grabbing it,” Mr Jack said.

Roger Pollen of the FSB(NI) is equally concerned.

"Most businesses have been squeezing their overheads for as long as they can, so there’s no fat left to get there. So the only way you can do that is to pass [the costs] on to the customer.”

Commenting on the fact that NI does not have a similar rates discount scheme to GB, Mr Pollen said: “Businesses here are impacted even more because of that policy failure.”

However, he added, there is no guarantee that if the Stormont Executive was restored in the morning that money would be allocated to business rates relief.

Last month, analysis of official government data by the commercial real estate specialist Altus Group found more than 150 pubs have disappeared for good from English and Welsh communities over the first three months of 2023, representing a 60% jump on levels from last year. The trade bodies have joined forces to warn that more venues will shut for good if cost pressures do not ease soon.

In a joint statement, the organisations said: “The energy crisis has been pushing pubs, bars and restaurants to breaking point for a year now. The government must recognise this crisis isn't just crippling businesses now. Left unresolved it will have a lasting wider impact long into the future.”