Urgent reform needed as casual dining chains grapple with ‘onerous business rate regime'

22/02/2018 - 07:00
Real estate firm Colliers has warned that casual dining chains will continue to struggle with spiralling costs and continue to close sites if the current system of business rates is not changed.

The property consultants have called for the government to bring the forward its plans to move to three-year business rates revaluations in order to avoid a “significant change” on the landscape of the UK high street.

Since the turn of the year, several once-thriving restaurant chains have been forced to announce closures or are currently looking at restructuring their businesses.

These have included Prezzo, EAT., Byron and Jamie’s Italian, with the later two both citing rising business rates as reasons for closures.

John Webber, head of business rates at Colliers, said: “Casual dining chains are seeing the negative impact of the 2017 Rating Revaluation, which we believe has substantially added to their already spiralling costs as they grapple with the rate rises this year.

“Several are now suffering from the same woes as the high street retailers who are also seeing reduced footfall as consumer confidence falls, diners cook at home or have take-aways, whilst inflation rises impact on costs and wages rise.

 “With the business rate multiplier so high at nearly 50p in the pound, property costs are therefore increasingly becoming an important factor as chains decide which outlets to keep open and which to consider closing.

“Many companies are now asking their landlords for a reduction in rent as the physical costs of running a property become an increasing burden. Business rates are playing their part in the difficulties as some of the massive rises for particular restaurants show, particularly those in London.”

Analysing some of the chains’ Business Rates Liability, Colliers estimate that Byron’s total rateable value has increased 40% with the 2017 Rating Revaluation, increasing from £7.764million to £10.63 million, with some restaurants, particularly in London seeing some massive rises

At Jamie Oliver’s Restaurants, the total RV bill appears to have risen 28%, up £5.7 million to £7.3 million with rises highest in Brighton (up 154% from £68,000 to £173,000), Cheltenham (up 80% to from £44,500 to £800,000) and Guildford (up 78% from £79,00 to £141,000).

And Prezzo saw RV up 23% from £12.8 million to £15.9 million, with again London outlets most affected: a 116% rise in RV in North Audley Street (£78,000 to 169,000) and in Northumberland Avenue a 113% rise (from £168,000 to £357,500), and the Haymarket restaurant saw an 80% increase also.

Colliers found that outlets seeing a decrease in rateable value were very much in the minority following the Revaluation.

“Moving to three-year business rates revaluations is all well and good, but this won’t impact until after 2022,” added Webber. “We could be seeing a significant change on the high street landscape in the meantime if nothing is done to support it.

“The Government must act now- to properly reform the system and bring the multiplier down.”

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