Business rates revaluation cited in swathe of retail and restaurant failures
The business rates revaluation has been almost as bad as the financial crash of 2008/2009 for restaurant groups and retailers, according to new research.
In the last 12 months, since the revaluation kicked in on April 2017, there have been 15 restaurant groups and major retailers have gone into administration or sought a Company Voluntary Agreement (CVA).
This compares only marginally better than the headline figures back in 2008/09 when 16 major companies or groups went to the wall.
Big names such as Jamie’s Italian and Toys R US have all hit the headlines of late and you will probably find somewhere in the story a reference to business rates and the delayed revaluation playing their part in the struggling businesses demise.
Looking at the business rate increases of the companies highlighted in the report published earlier this week, they had seen a combined rise in their business rates of more than £152m.
It was estimated that the Prezzo restaurant chain alone had rate increases from £7.2m to £7.8m (+7.7%), Jamie’s Italian saw its bill rise by £100,000, from £3.5m to £3.6m (+2.8%) with Byron also seeing a big rise, from £4.9m to £5.3 (+7.6%).
According to the Chief Executive of UK Hospitality, pubs and restaurants alone are therefore paying £1 billion a year more in rates than they should be.
Whilst these figures will have been significant for any balance sheet it’s worth remembering that there was also a “perfect storm” of wages increases, the apprenticeship levy and higher inflation all playing a part.
We may still see other big names joining the unfortunate list of retailers and restaurant chains in 2018 with the second rates’ uplift coming this month as well as the inflationary rise. The Chancellor may find his business rates’ coffers not quite so full at the end of this financial year.
This case centres on a substantial three-storey office block: Mexford House, North Shore in Blackpool.
Pressure is still increasing on the Government to take action on business rates after the latest national town centre vacancy rate reached 10.2% last month.
The Rating Surveyors Association has published its response to the Government’s current inquiry on how business rates policy has impacted business with some interesting recommendations.