AT a time when large parts of the hospitality industry are enduring much-publicised hardship, it is encouraging to note there is still light amid the pervading gloom from a sector perspective.
Stories of bars and restaurants closing their doors for good have been the dominant theme of 2024, so this week’s news that Buzzworks Holdings, the Ayrshire-based hospitality group, is in talks to add three more venues to its 19-strong estate and double in size, creating 800 jobs in the process, was heartening to read.
No one in the industry is finding life straightforward at the moment, given the relentless pressure on costs and the fragile nature of consumer confidence, but family-owned Buzzworks has found a formula that works for the venues it operates and the communities they serve.
“Hospitality is an integral part of life throughout the country and without it our towns and cities would be pretty miserable places to live,” said managing director Kenny Blair.
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“We want to continue to invest but we’re not immune to external factors coming our way that will impact the pace for growth.
“Our industry is experiencing pressures from increased property costs, increased rate of pay from [the] national living wage, and general overhead inflation including energy costs. We’re trying to navigate this and won’t compromise on our high standards.
“The goal is for Scotland to be a place where hospitality businesses thrive rather than survive - communities where jobs and careers are created for local people in venues that can be enjoyed by all. This is what will drive us forward and we are confident the good momentum we are seeing will put us in the best possible position to fulfil our ambitious growth plan.”
Buzzworks is not the only Scottish operator to have begun the year on an expansion footing. Glasgow-based restaurant group DRG revealed it is eyeing a first site in London and a second outlet in Newcastle as it reported upbeat trading figures for its most recent financial year, which included its busiest December since 2019.
The group, which highlighted the impact made by its new Café Andaluz outlet in Stockbridge, Edinburgh since it opened in November, achieved record turnover in the year to April 30, 2023, underlining its recovery from the pandemic period.
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Given the difficulty of current conditions, it is hugely encouraging to see these well-regarded Scottish businesses in such bullish mood. But neither DRG or Buzzworks are oblivious to the acute challenges facing the industry, whether it be from high energy, food or labour costs or the continuing impact on consumers from elevated inflation and interest rates.
Those difficulties were underlined this week by a survey on Christmas and New Year trading by the Scottish Licensed Trade Association (SLTA), which produced a series of worrying findings.
Following the disappointment of the Scottish Budget in December, which did not provide the support that the industry was hoping for, the survey found that 75% of outlets anticipate that they will need government support to survive in 2024. More than half (53%) of outlets said trading levels over the festive season either remained the same or declined on the previous year, while 22% reported a fall of more than 10%.
The survey, of more than 500 hospitality businesses, also found 57% of outlets would not open fully in January and February because it would not be cost effective to do so.
First Minister Humza Yousaf may well be pre-occupied by the UK Covid Inquiry and rows over WhatsApp messages this week, but it may have concerned him to read that 96% of respondents to the SLTA agreed that the Scottish Government was “out of touch” with the business community. It indicates that work still has to be done by ministers to restore their reputation among certain business owners, despite the hopes around Mr Yousaf’s much-vaunted New Deal for Business.
As operators contemplate the outlook, industry-wide calls for value-added tax (VAT) to be slashed in the sector are building a head of steam on both sides of the Border. A petition to the UK Parliament, lodged by restaurateur Andy Lennox, calling for VAT to be cut in the industry to 10%, had secured 13,000 signatures at the time of writing.
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An accompanying video features hard-hitting contributions from a range of business owners and representatives, including Sacha Lord, night-time economy adviser to Greater Manchester, and TV chef Simon Rimmer, who in early January closed his Greens vegetarian restaurant in Manchester after 35 years of trading.
Mr Lord declares in the film: “There will be people watching this right now, not realising that tomorrow they could potentially lose their favourite pub, sandwich shop, nightclub. And it’s going to happen.
“Hospitality needs as much support as possible and we are looking for the Government or someone to step forward and help. It’s simple, reducing VAT will undoubtedly save businesses and save jobs and by stepping in and reducing VAT that’s the one single mechanism that can save the industry.”
There is plenty of support for a cut in VAT for hospitality in Scotland too. Mario Gizzi, co-owner of DRG, observed that hospitality businesses in the UK pay significantly more VAT than their counterparts on parts of the European continent and called for the rate to be reduced to around 8%, while also making the case for an overhaul of the “outdated” system for business rates in Scotland.
The Scottish Hospitality Group, SLTA and UKHospitality Scotland trade bodies have long put calls for a reduction in VAT to the forefront of their lobbying efforts too.
A debate on fiscal measures to support the sector was held in the UK Parliament at Westminster yesterday.
From an industry perspective, it has hopefully provided a platform for MPs to highlight the challenges it is facing and the support businesses need if they are to weather the current storm. It may also have given food for thought to Chancellor of the Exchequer Jeremy Hunt as he pulls together the Budget that will be announced in March – the last before the next general election.
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