Belfast restaurant landed with 66% rent increase as pressures on hospitality industry deepen

Hospitality insiders are warning that restaurateurs are under mounting pressure after one city eatery was hit with an "alarming" rent hike.

The move came as Belfast City Centre restaurant Parisien had a 66% rent increase imposed on it, back dated to last year, which will see it having to pay £100,000 a year for its premises.

Colin Johnston, Managing Director of Galgorm Collection, which owns Parisien, said: “We’re absolutely taken aback by what amounts to an alarming annual rent hike of 66%, which will be backdated by almost a year. In an inflationary environment, we would have expected an upward increase but the magnitude of this has come without warning.

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"Since Covid-19, we’ve worked hard to build a sustainable recovery in the face of soaring overheads including energy, rates, food and labour and this is another huge additional cost.”

Since the start of the Covid pandemic in 2020, the hospitality industry in Northern Ireland has been under severe pressure with the Cost of Living Crisis making the trading environment even more difficult.

While energy bill, food price and staffing costs increases have taken its toll on many within the sector, many within the hospitality industry have said that the amount they are paying in rates and the level of VAT they have to deal with are causing the most difficult problems.

Speaking to Belfast Live, one Belfast restaurant owner highlighted how they are "just about managing to break even" at the end of every week and their fears of increasing prices on their menus due to potentially putting customers off.

They highlighted how 75% of their revenue goes towards staffing and food costs, with the remainder meant to cover bills, rates and tax, leaving them with very low margins.

They said: "It feels like there is a constant squeeze on everyone in the hospitality industry and a restaurant or cafe is doing very well if it manages to break even at the end of the month due to the costs that we face.

"While we have been very lucky at our premises where rents have been very managable for us, it is our other overheads that are causing the most difficulty, particularly the increase in rates and high VAT level that we are having to deal with compared to other parts of the UK and Ireland.

"It feels like every year since the pandemic we have been waiting for things to turn a corner and become easier on the industry, but that has never happened and each year becomes more and more difficult.

"When I look across all of our restaurants we are very lucky to make any profit at the end of the month, and that is when we have been fairly busy and a month where trading is down a bit can have a huge impact on a business.

"We have looked at ways that we can try and increase revenue, but this can lead to blowback from customers for being too expensive and we know that they are also struggling with the cost of living crisis. It is getting to the point where many people would rather sit in than go out for a nice meal.

"The hospitality industry as a whole needs far more support than we are getting and rates relief and a reduction in VAT would be something that could give the sector a lifeline and make the trading environment a lot better for businesses and our customers."

At a meeting in Belfast last week, trade bodies representing hospitality businesses across England, Scotland, Wales, Northern Ireland, and the Republic of Ireland called on suppliers and government to help their hospitality businesses before it is too late.

Colin Neill, Chief Executive, Hospitality Ulster said: “At what point do Governments actually start to realise the pressure that the hospitality sector is under here?

“We are seeing in the media that there is a steady stream of establishments going to the wall each week, restaurants and pubs that have been in business for years are being lost. We all see it, they must too. The pandemic, the cost-of-living crisis and ever shifting consumer trends have all had their individual impacts, yet the approach government has towards taxing the sector hasn’t moved with the new realities.

“There is no alternative. A contracting hospitality sector won’t just bounce back, it is being attacked on multiple sides. Owner-managers who just about have their head above the water aren’t optimistic and are shattered emotionally, physically, and financially by struggling to make ends meet. We are not talking about balancing a monthly cashflow here, we are talking about the complete depletion of cash reserves and savings to try and save the last vestiges of hope.

“It’s long overdue that the entire taxation system around the hospitality sector is reviewed – VAT, Rates and Employer costs must be reduced – these are all within the control of the government.

“We are constantly forced to fight fires every single day, which leaves no time at all to look to the future of the sector. The odds seem to be stacked against us, and we must ask, to what end? If the greedy government tax us out of existence, then they won’t have the benefits of what we know was once a vibrant sector ever again. We can see and feel that customers are now at the ceiling of what they can afford with their own disposable incomes as households continue to scale back.

“We now need to see core priority areas dealt with urgently, the picture could not be clearer about what needs to happen. Without focus on the sustainability of the hospitality sector we won’t meet tourism targets; fewer businesses will mean overall reduced contribution to the government’s coffers and taxation will have to rise again for the businesses that are left in a never ending circle of decline.”

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