There has to be something fundamentally wrong - restaurant closure

[Terroror]

A restaurant we go to quite often is about to closing after two decades in business.

It’s popular, booked out all the time. In fact, I understand it’s had the busiest Christmas period in its history.

Its closing because the business is no longer sustainable to due to rising costs. Not lack of custom - it’s very busy - but energy costs, rates, staffing costs.

A much loved business down the pan.

There really is something fundamentally wrong when experienced restauranteurs with a busy restaurant can’t make this work.

I don’t see much concern from the government.

AIBU?

Landlords are a big problem here - big commercial landlords who put the rent up. It is not an easy one for the government to solve. And if you think capitalism is the right way to run an economy on principle, the government should not be stepping in.

also, restaurants are often a precarious business- even fancy ones don’t always make money and margins are tight.

A busy restaurant often indicates their margins might be considering the consumer rather than the bottom line. Every beloved restaurant closed with my patronage because it wasn’t a rip off. As said rents will be a factor. I notice places I used to like bulk stuff out with cheaper ingredients potatoes for example now so stopped going as prices rose these places will survive and newer customers will be oblivious.

One here gone the same way.

they’ve got a couple of restaurants in the area and all are lovely and very popular.

It’s a familiar story unfortunately with lots of small businesses. Relative runs a small trades type business. They got absolutely hammered during Covid and have now been told by insurers/ landlord etc it was only guidelines to close which is BS. We suspect the landlords costs were covered and he hasn’t passed these on. Truth be told they’ve neee really recovered since then.

On top of that the cost of materials has sky rocketed, wages for labourers is sky high, it’s nigh on impossible for them to do their work in London without getting parking tickets, customers don’t want to pay more as they can go online and say oh I saw this on xyz for this amount. They’re always busy but just can’t seem to make it pay and will inevitably have to close

The Superdrug closed in my town a couple of years ago. They literally have a store in every high street, often more one in a town, but not here. They cited high rents and extortionate business rates. So it’s not about the takings.

Three local business have shut on my High street since covid. Two were family business that had been in the same premises since the Victorian era. Both of those had people retire and their children did not want to take over the business. I’m unsure of the third ones length of tenure but it was a similar story though they had no children. My mate owns a small shop, his DD was going to take over but has decided against this, he remains open as one of the last independant shops on our High street running it at age 70. I’m assuming with some restaurants it’s the same. My bio Dad had a restaurant, I love cooking and worked in his restaurant as a child and since I retired have done voluntary cooking at couple of food projects but no way would I want that as a career.

I am not disputing that many business are suffering because of costs but there is this generational business issue. Lots of second and third generation children of immigrants like me especially have just no interest.

Mmm, and a lot of the sector was reliant on an oversupply of cheap labour. The job market and population pyramids look very different now.

YANBU, there are closures around here too. No landlords involved in the ones I know of, and the owners can’t find buyers for their businesses. Government policies on NI and rates have undoubtedly been the last bloody big straw bale breaking the camel’s back on top of the other economic conditions.

Rents
Business rates
Costs of food ingredients
Business & third party insurance
Staffing minimum wage

It’s a tough game and for some just not worth the pain any more

If it's so busy they should be able to raise their prices to cover the rise in costs. There is no point being packed out if you're not making enough money to cover the costs - you're basically paying people to eat in your restaurant.
If they end up with not enough customers willing to pay those prices, they have a different problem. But it's not necessarily true, that putting prices up will drive all your customers away.

There is a busy family-run gastropub near me. The prices are quite high (in terms of what you might expect for a village pub rather than a fancy restaurant), but it's still popular because the food and atmosphere are great. Maybe at the place you're talking about, they were too hesitant about raising prices to what they needed to be?

The entertainer has just closed in my town the rent increase made it not worth the bother there is limited footfall in my area the town centre as a whole is shocking and they charge a fortune to park our cars and charge the shops massive rents we are a failing town and no-one will do anything about it

Don't forget Brexit. Far fewer young people from the continent available for minimum wage jobs with unsocial hours.

I was talking to a local coffee shop owner who place was closing on. He was telling me how much he needed to sell a day just to cover his overheads. It was a crazy amount.

Clinton’s Cards closed their branch in my city centre a couple of years ago too. They have branches everywhere and I can’t imagine this branch was any less profitable than the others, but I suppose it must have been the rents.

Is it in Manchester, by any chance? If so, I know the restaurant you mean and I'm absolutely gutted that it's closing. We've been eating there for 20 years and it was our go-to whenever had family visiting because it was so reliably good.

If it's not the same restaurant, then it just goes to show that there's a pattern here.

Restaurants, bars and cafes keep high streets and city centres alive. With retailers giving up bricks and mortar stores to sell online, the businesses that keep people coming to town are places that provide in-person services - cafes, pubs, restaurants, music venues, theatres, places that provide an activity like escape rooms or whatever, as well as hairdressers and nail bars and gyms and so on. If we keep losing successful independent cafes and restaurants, we're going to be stuck with high streets that are basically empty except for a few barbers and a couple of chain restaurants that serve mediocre, identikit food in no atmosphere and survive on economy of scale, which means their food is essentially akin to going out and eating a ready-meal.

There was quite a well known fish shop near us. When I first started going it was £17.00 for 2 fish and 1 chips and less than a year later it was £19.50.
They have now closed down and I asked in one of the other shops if they knew why and they said the rent and rates were 12500.00 a month.
Putting up prices is not working because obviously people are going less.
If I can work that out surely one of the geniuses in the government can.

We are returning to the situation as it was in the 60s or 50s or before.

The options were expensive 'posh' restaurants, or greasy-spoon caffs for truckers and teenagers. Neither of which would you dream of taking your family to. Eating out as a family just wasn't a thing for the vast majority, unless a very special occasion once a year. Going to a restaurant for a meal with your girlfriend/boyfriend was a very special date.
It was a thing in the 1960s to drive to a motorway service station on the newly opened motorways specifically to eat a meal at the restaurant there.

The arrival of modern fast-food places (to replace the traditional caffs), and pub restaurants for the masses, changed expectations completely.

Our society is no longer wealthy enough to support lots of people eating out regularly.
We have take-aways for now, but in a few more decades of economic decline, even they will be unaffordable for the masses, except perhaps for chips that you go and fetch yourself (no delivery service).

Well thry could put their prices up but would people pay it?

Do you think that the government should control commercial rents? What role do you see for them in this scenario?

Their rent is being increased exponentially (I am unsure as to who is going to rent in future when the landlords all do this - is there a tax-dodge in here somewhere?)

Their other costs are rising - and guests don't want to pay higher prices

So they compromise by paying their staff a pittance, and not having enough staff. This does several things: it makes it difficult to hire anyone who can possibly make more elsewhere. It makes the staff unmotivated. This annoys guests who are becoming more and more abusive. Which means more and more staff leave.

It is a perfect storm. My personal view: we have been used to cheap food and cheap restaurants for too long and going out for a meal is getting back to what it was when i was younger, that is something that is much more of a treat, and we went much less often.

Maybe we could get vouchers and ‘eat out to help out’. Oh…hang on….

A friend of ours owns a restaurant, he’s still filling tables but people are spending less. So, only getting a main course for example instead of a starter and main and not ordering as much alcohol,
The restaurant loons busy but takings are way down.

It's not just restaurants and it's not just greedy landlords though.

We have a little pie shop/bakery in our village. I'm their accountant so I know their "books" inside out. It's been there decades, though has had several changes of owners over the time I've lived in the village.

It's impossible for them to make more than minimum wage for the hours they work. Their staff get paid more than the two owners.

Their landlord (local couple) are actually very fair and havn't increased the rent for many years - it's well below "market rate" and cheaper than comparable sized retail units in the village.

Heat, light and power is absolutely enormous cost - over £1k per month for the ovens, counters, fridges, freezers, coffee machine, lighting and heating the unit. That's for basically a tiny two roomed "shopfront" (only open six hours per day) the backroom being the food prep area, the front room being the "shop" with just a couple of counters and shop floor space for a maximum of 4/5 customers. It's tiny! Power for businesses isn't regulated, there's no cap, and despite them going out to the market for comparison quotes every time their fixed contract ends, none of the providers offer any real low price options - "unit" prices of gas/electric used are many times the same unit prices of a domestic dwelling literally next door! Utility firms are just ripping off small businesses to subsidise the reduced/capped/competitive prices they have to offer domestic customers!

Staff wages NMW increase, employers NIC increases, employer workplace pension costs, have all risen far higher than they can increase their prices so tighten and reduce their margins.

But all other costs are rising faster for businesses than domestic inflation too - bank charges, business insurance, telephone, broadband, fire and burglar alarm systems, subscriptions, etc are all rising year on year faster than inflation. Again, they can't increase prices by that much, so another hit on the margins!

It's a busy shop, the current owners have revamped what they sell, much broader range of cold and hot meals alongside the traditional "bakery" items they still sell. Turnover is far higher than it was when they bought it about 7 years ago (even adjusted for inflation, they sell a lot more and are a lot busier), but they still can't come out themselves with minimum wage profit for the hours they work because their costs/overheads have risen far faster than they can increase their prices and/or increase the amount of goods they sell.

The cost of living "crisis" may be bad for workers, but it's a hell of a lot worse for lots of small businesses as they're being squeezed even more from all sides.

I'm literally waiting for the phone call from our village bakery to say they've had enough and are getting jobs in Tesco instead and closing it down.

To be fair it was always just advice to close. It was very clear. If you cannot work at home then you can go to work.

It nearly took our business down. All of our suppliers had closed, locking client funds in and holding the materials. Cash flow gone, had to reorder at own cost.

Serious serious problem for us. I still to this day refuse to work with any of them unless absolutely desperate.

But it also made our business. Whilst everyone else was having a gov funded holiday we kept working and tripled our growth overnight.