Statistics always become starkly real when someone you know becomes one.
So it was with the news that after seven years in business the owners of the Red Cup Cafe in Harrow, Reena and Henal Chotai, were calling it a day, at least for now, because of a crushing increase in their energy bill on top of a massive rent hike.
It’s a too familiar story. Another independent operator bites the dust, just one of at least 2,000 to shut up shop in the last few months. I say “at least” as that is the net figure of closures quoted by data providers CGA. The churn in sites is much greater.
Over Covid, Britain lost just shy of 10,000 licensed premises, the majority independents. And as this current wave of closures hits, it is the independent sector that is feeling the brunt. Cost pressures are hitting everyone, but the truth is that operators with scale have (in most cases) the financial strength and headroom to get through. In fact, collectively, groups have seen a net increase in site numbers this year as opening programmes roll-on, at a reduced rate perhaps, but the chains are still expanding.
We have an asymmetric, some would say even polarised, market. Should we be too worried? Business failures, for whatever reason, are not new in hospitality – and some would say a fact of life in a competitive, capitalist system. So, should we just get on with it?
In number terms, independents remain the biggest proportion of the eating and drinking out market – and come in all shapes and sizes. Even in good times, many just don’t make it – and some simply don’t deserve to.
Some stay small, while others will flourish and grow and perhaps become the next Pizza Pilgrims or Mowgli or Living Ventures or Loungers or even JD Wetherspoon – for all of those started like so many, as a single site, and an entrepreneurial dream.
Not to get too romantic about it, but independents are in many ways the sector’s lifeblood. So, in these ultra tough economic times are we in danger of losing out on what could be the next generation of inspiration leaders and brands?
Should stronger, well-established players be doing more to help and nurture the small guys, and in particular those just starting out? Some, of course, do and in that respect, it’s hats off to the big street food operators, the KERBs, Sessions, Boxparks and Digbeth Dining Clubs of this world for continuing to nurture talent and, in particular, helping so many newcomers through these past few years. It can be done, and for sound business not just benevolent reasons.
Hospitality actually has a pretty solid track record when it comes to collaboration. We are seeing it now in recruitment with the support that Hospitality Rising has attracted, and also on the environment with the Zero Carbon Forum, where companies big and small are coming together to share ideas and best practice.
The industry often looks to the government for help, but the truth is there is no more money coming from that direction. There was some good news on business rates in the Chancellor’s autumn statement, and we can perhaps expect a small Christmas present in the form of energy costs support for business this month, but don’t hold your breath about much else any time soon. Certainly there’ll be no VAT cuts.
We are on our own – which may turn out to be a good thing. There is a view that the sector has too much of an Oliver syndrome, always wanting more. The government rightly or wrongly thinks hospitality has had plenty already, but, in any case, the cupboard is bare, if that’s not mixing too many metaphors.
No-one is arguing that mounting cost pressures aren’t hurting, even if the public still seems to be going out to eat and drink in the run up to Christmas, but the ‘going-to hell in a hand cart’ messaging isn’t helping attract either workers or investors to the market.
Showing that the sector can work together to get through this might be a better look – and actually behind all the doom and gloom there are plenty of operators that are optimistic about the longer term.
Efforts around recruitment and sustainability show what can be done – and I love ideas like the suggestion that hospitality businesses should perhaps invest together in windfarms to secure our own energy source. Creativity and innovation is what hospitality is good at.
How that might manifest itself in helping struggling smaller operators is another matter. But what I hope we all want is a marketplace that in the not too distant future is strong enough and fertile enough to allow the likes of Reena and Henal to start up again – as good entrepreneurs they are determined to do.
