Accountancy & Banking

Saffery Partner Roger Wareham looks at the key challenges for the UK retail and hospitality industry

By Roger Wareham [email protected]

Published: December 11, 2023 | Updated: 11th December 2023

In this month’s Finance Matters, Saffery Partner Roger Wareham looks at the key challenges for the UK retail and hospitality industry. 

We also get to meet newly promoted partner, Casidhe Baleri and learn of her love of languages and also the Tour de France!

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Bouncing back after the Covid-19 pandemic was a hope for many industries across the UK. Even with the ‘Eat Out to Help Out scheme in place around strict curfews and restrictions to counter the pandemic’s economic impacts, the hospitality sector was one of the hardest hit – and continues to be.

A difficult trading environment

It’s difficult for businesses to underpin what is currently affecting the sector the most: the cost-of-living crisis, expensive overheads or post-Brexit staff losses and soaring labour costs.

On 22 November 2023, the Chancellor of the Exchequer, Jeremy Hunt announced a package of support in excess of £4 billion over the next five years for small businesses and the high street with respect to business rates. The biggest help for many is the extension of the Retail, Hospitality and Leisure (RHL) scheme, which had expected to end in 2024, but has been extended for another year until 2025. This provides a 75% relief for eligible RHL properties.

In a recent call for business rates reform, the British Beer and Pub Association stressed the importance of extending the relief scheme, noting that since the pandemic, UK pubs have faced endless challenges, including complications from the ongoing energy crisis and for many the business rates increase would have been “the last straw.” Concerningly, nearly 400 pubs closed for good in the first six months of 2023, almost matching the 386 lost in the whole of 2022.

Views from the hospitality industry

Andy Lennox, founder of Fired Up Collective, a hospitality business born out of the pandemic in 2020, and the Wonky Table group, which connects hospitality businesses in Bournemouth, Christchurch and Poole,  has championed nationally for hospitality and VAT relief. Here he provides an insight into how hospitality businesses can succeed in the face of continuing adversity.

“The last four to five years in hospitality has been an uphill battle; a constant slog against events outside of our control, like Brexit, Covid-19, the cost-of-living crisis, a utilities crisis, inflation, staff shortages, the war in Ukraine, rising wages, rising interest rates, and increased taxes. All of this against a backdrop of an industry that was already reaching over-saturation back in 2017.

“Those who are still here must take a moment to pat themselves on the back. We’re not there yet, by any stretch of imagination, but we are still here – which is no mean feat. However, there are deep scars which will take a long time to heal; the pandemic has left an indelible mark on the hospitality sector. However, as we move forward into 2024, the industry is gradually rebounding, although many are burdened with a catalogue of bounce-back loans, the Coronavirus Business Interruption Loan Scheme (CBILS), rent arrears and debts that will take decades to settle.

“The state of play in the hospitality sector in 2023 is marked by resilience, adaptation, and transformation. The industry is recovering from the pandemic, but challenges persist. To succeed in this new landscape, businesses must continue to embrace technology, meet evolving guest expectations, prioritise sustainability, and find innovative ways to address labour challenges. Even more so, they must learn how to be hospitable again. In many ways it’s the hardest thing to have lost, as technology has replaced staff, Covid-19 guidelines have become a cheaper form of operating, and hospitality needs to re-learn the ‘art of hospitality’- the innovative approach of creating personalised, memorable, and outstanding guest experiences. Something the Fired Up Collective prides itself on.

“By doing so, the hospitality sector can survive and thrive in the years ahead. However, there are some significant problems that need to be addressed. The metrics have changed for the industry and a re-balancing needs to happen for it to grow properly again. Finding a way back to the art of hospitality is now integral, but also finding the new metrics for the industry are also key”.

The case for reducing VAT

“In my opinion, it’s not labour or rates, landlords or inflation, but the way the tax system works for our industry. VAT is, and will remain to be, one of the most challenging areas for us, and reducing VAT for the hospitality sector has several compelling arguments:

  1. It serves as an effective economic stimulus by encouraging consumer spending and tourism, benefiting hotels, restaurants, and related businesses.
  2. It preserves and creates jobs in a sector known for its significant employment opportunities, particularly during economic challenges.
  3. It promotes tourism, a crucial industry in many countries, attracting both domestic and international visitors, thereby boosting revenue.

“Additionally, a VAT cut would support hospitality businesses with narrow, if any, profit margins, and will enhance our sector competitiveness, allowing us to invest more.

“It’s the one single thing that can change the course of the industry; pubs and restaurants are closing at an alarming rate (some 5000 this year) and something bold needs to be done to change this current trajectory.

“So, help the industry in the crusade to keep food well priced, to stop inflation and to continue to be hospitable not just an industry based on QR codes and never enough staff. Dine where you know they deliver Hospitality, like at the Fired Up Collective and sign our petition below.”

https://chng.it/SnYhrMtLcv

How Saffery can help your business

Whether you’re a restauranteur or an entrepreneurial business grappling with any of the issues discussed, please get in touch with Partner Roger Wareham. E: [email protected]

***

Name: Casidhe Baleri

Role: Audit partner

Time at Saffery: 12 years

What’s the best bit about your job?

It has to be the clients. I specialise in charities and not for profit entities – and it is amazing to hear the experiences and impact they are having locally. I really enjoy the variety they bring; no two charities are doing the same thing.

The culture of Saffery is really important to the business and the people within it – what do you think you bring to the team and what do you contribute?

Having joined as a graduate, I am Saffery’s born and bred so believe I bring a good understanding of how our team structure works and I understand the strengths and restraints having personally experienced it. As such I believe I am a fair and approachable person in the office, willing to chip in and pick up work, if needed – a team player.

If you weren’t doing this role, what might you be doing?

When I was younger I wanted to be a translator having studied French and Spanish. I also tried some Japanese as my teachers advised a more unusual language might be beneficial. So, something with languages?

What do you enjoy doing outside of work?

I have two young children – we love going for walks on the beach and in the New Forest. More recently my son has shown an interest in skate-boarding so we have been spending a lot of time at local skate parks attempting to catch him when he falls off!  

Tell us something about yourself that we don’t know

I have a keen interest in the Tour de France cycle race having been to watch several stages over the years. I don’t cycle myself but it is the epitome of a team sport and I love the French scenery. I’m looking forward to Mark Cavendish having one last go at winning the most stage wins in 2024.

Who or what inspires you?

I think it has to be my family. They are the reason I get up and go to work in the morning – so that I can hopefully inspire them but also provide for them.

What’s your favourite place in Dorset?

I spend a lot of time at Moors Valley with the kids. There is so much to keep them occupied and it’s lovely to see the difference in going there now with them to when they were in the pram. I think it has to be there,  given the memories!

Give 3 words to describe yourself

Approachable, loyal and understanding

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