Rates News

Increased business rates hit Jamie Oliver’s Barbecoa chain

Restaurants owned by celebrity chef Jamie Oliver face a massive 28 percent rise in business rates this year, with one chain, Barbecoa, looking set to cease trading imminently.

According to analysis by property firm Colliers, the total bill for restaurants accross the chefs empire rose from £5.7 million to £7.3 million in the last year. One restaurant in Brighton saw a 154 percent rates hike.

A report on the Telegraph revealed that two of the chefs Barbecoa restaurants had been impacted by rising costs, leaving bosses unable to meet rent bills.

John Webber, of Colliers, said casual dining chains were being squeezed after the revaluation of rates bills in April 2017.

“Many companies are now asking their landlords for a reduction in rent as the physical costs of running a property become an increasing burden,” he said.

“Business rates are playing their part in the difficulties as some of the massive rises for particular restaurants show, particularly those in London.”

Mr Oliver has already closed 12 of his Jamie’s Italian restaurants as part of a company voluntary agreement (CVA). He had been set to open a third Barbecoa site in a new development in London’s Victoria, but it is yet to begin trading, leading to speculation that the company has pulled out of the site.

Meanwhile, other chains are also facing large jumps in their business rates bills. Colliers’ research showed Prezzo’s rates grew 23 percent to £15.9 million last year, while burger chain Byron was hit by a 40 percent rise to an annual cost of £10.6 million.

Accountancy firm Moore Stephens found that the number of insolvencies of restaurant businesses jumped 20 percent to 984 in September, up from 825 the previous year.

The sector has been hampered by increased competition on the high street due to an “unprecedented level of rollouts of new restaurant chains” over the past 10 years, as well as rising wage costs, brought about by the introduction of a higher minimum wage, which rose from £7.20 to £7.50 last year and is set to rise in April to £7.83 for those aged 25 and over. The Government’s apprenticeship levy has also weighed on companies.

The rising cost of imported produce, caused by the pound’s fall in value, has also hit the profitability of restaurants – as have business rate rises introduced in April 2017. Add in competition from online takeaway services and there is further pressure on bricks and mortar businesses.

Source: Telegraph

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