Sector warns government of ‘business closures and job losses within a year’ due to Budget tax hikes: Many of the UK hospitality sectors leading companies have signed a letter to the chancellor Rachel Reeves, warning of the unprecedented damage the rise to employment costs will inflict on the industry. They call her inaugural Budget “regressive in [its] impact on lower earners” and warn that “business closures and job losses within a year” are inevitable. UKHospitality board members, which includes the bosses of Fuller’s, Stonegate Group, Azzurri Group, Whitbread and Mitchells & Butlers, have written to the chancellor, supported by a further 108 hospitality businesses, including The Restaurant Group, Loungers, JD Wetherspoon, Big Table Group and Young’s, to outline the impacts of the additional £3.4bn in costs facing hospitality in April. The signatories say that the lowering of the threshold at which employer National Insurance Contributions (NICs) is paid to £5,000 will bring in thousands of part-time staff that were previously never affected, disproportionately affecting hospitality. They also warn that the cost increases will cause small business closures within a year, businesses to reconsider investment plans, jobs to be drastically cut, hours for team members to be reduced, and contract caterers struggle to meet public sector catering contracts for schools, hospitals and prisons. The signatories have put forward to the government two measures to mitigate this impact. Firstly, to create a new employer NICs band from £5,000 to £9,100, with a lower rate of 5%; or secondly, to implement an exemption for lower band taxpayers working fewer than 20 hours per week, targeting support for part-time and lower paid workers. The letter says: “The changes to the NICs threshold are not just unsustainable for our businesses, they are regressive in their impact on lower earners and will impact flexible working practices which many older workers and parents rely upon. Unquestionably they will lead to business closures and job losses within a year. The threshold change brings many team members into employer NICs for the first time. We estimate the threshold change may be four times the cost of the new headline rate. There is no capacity to pass the costs onto customers. Businesses would be reluctantly forced to raise prices by 6-8%, fuelling inflation, yet could not realistically do so as our customers are at the end of their ability to pay more. Instead, many businesses would have to reconsider investment and drastically cut jobs and reduce the hours of team members. Without action, many businesses will be forced to reconsider their growth plans, and many smaller venues may be at risk of closure, risking future job creation in communities up and down the country. We know you are determined to ensure that growth is available to all. Yet this change to NICs does the opposite, balancing the books on the backs of the businesses which provide jobs to all in society, nationwide, while sparing businesses that used technology to shed jobs. We therefore ask that you consider measures to protect businesses who employ lower earners. We understand that these proposals come at an immediate financial cost, but we are absolutely firm in our belief that the lost growth potential which would result from inaction would be substantially more expensive, for the economy, for society and for the public finances.”

 

Premium Club members to receive next Turnover & Profits Blue Book on Friday featuring more than 1,000 companies, videos from Multi-Club Conference on 22 November: Premium Club members will receive the next Turnover & Profits Blue Book on Friday (15 November), at noon. The database will feature 114 updated accounts and 16 new companies, taking the total to 1,110. A total of 644 companies are making a profit while 376 are making a loss. The Blue Book is updated each month and ranks companies by turnover, profit and profit conversion, listing directors' earnings for the past five years. Premium Club members will also receive all the videos from the final Propel Multi-Club Conference of 2024 on Friday, 22 November, at 9am. They include Michael Clarke, managing director of Wendy’s UK and Europe, discussing the return of the third-largest quick service restaurant brand in the US, to these shores, the challenges and opportunities of launching here again, its relationship with its franchisees, and where the business goes from here. Meanwhile, a panel featuring Mark Finch, head of enterprise for Uber Eats UK & Ireland, Joe Heather, general manager of UK & Ireland at Deliverect, Megan Burton-Brown, marketing director at Tortilla, and Máté Kun, chief executive and co-founder of Growth Kitchen, discuss the evolving role of delivery in the sector, the key trends and what the next phase of food delivery will look like for operators and consumers. Premium Club members also receive access to five other databases: the Multi-Site Database, the New Openings Database, the UK Food and Beverage Franchisor Database, the UK Food and Beverage Franchisee Database and the Who's Who of UK Hospitality. All Premium Clubs members will be offered a 20% discount on tickets to Propel paid-for events including Restaurant Marketer and Innovator (two days in January 2025) and Excellence in Pub Retail (May 2025). Operators that are Premium Club members are also able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club members receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club members will be sent a dedicated monthly newsletter that will highlight key updates in the sector and direct subscribers to all the vital content their membership offers. Premium Club members also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.

 

Shares in Greggs and M&B fall after analyst downgrade on Budget impact: Deutsche Bank has downgraded its ratings for Greggs and Mitchells & Butlers in light of the government’s recent changes to employer national insurance contributions, stating that they disproportionately impact a “labour-intensive leisure sector”. The bank has lowered its stance on Greggs from ‘hold’ to ‘sell’, cutting its target price from 2,600p to 2,400p, and cut M&B from ‘buy’ to ‘hold’, shifting its target from 360p to 280p. JD Wetherspoon was left at a ‘hold’, but the target has come down from 750p to 600p. Greggs’ share price was down 6.1% at 2,636p during trading on Friday and M&B dropped 5.4% to 239p. Deutsche Bank downgraded Greggs, predicting the changes would cost it £45.8m in 2025 and £51.2m in 2026, as well as suffering a 23% fall in pre-tax profit in each of those years. It said price increases would be the most obvious measure to offset the costs for Greggs, known for its affordable offerings. However, “it is difficult to be confident [its rivals] will price-up,” especially in an environment when the recent consumer prices index suggests inflation is slowing, the bank added. “The changes had already been anticipated directionally, but in magnitude (or structure), were worse than factored into company guidance and investor expectations,” Deutsche Bank said in a research note on Friday.