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Cheshire pubs and restaurants at risk due to business rate hike

Revaluation will see bills rise for many businesses with pubs hit hardest of all

 

Hickory's Smokehouse on The Groves in Chester

Pub and restaurant owners fear a massive business rate hike could be the last straw for small independents.

Draft figures show most pubs, restaurants and hotels across West Cheshire will be badly hit in a pattern repeated across the country.

Struggling Chester city centre shops face a slight reduction and offices should escape the worst of the bigger bills.

Chancellor Philip Hammond, who is a former Chester resident. Photo: Stefan Rousseau/PA Wire

Under-fire Chancellor Philip Hammond is likely to implement measures to soften the blow in the March 8 budget.

Some pub owners report sleepless nights as they wrestle with how to survive.

Among the most seriously clobbered is a company that has turned mediocre businesses into success stories Barlounge in Watergate Street and Hickory’s Smokehouse by The Groves.

Neil McDonnell, owner and co-founder of Barlounge, Hickory's Smokehouse and Upstairs at The Grill.

Owner Neil McDonnell, is ‘staggered’ after the rateable value of Hickory’s was bumped up by 475% from its current value (£56,000 to £322,000) and Barlounge was jacked up by 147.8% (£113,000 to £280,000).

Businesses pay a percentage of the rateable value – 48% for larger firms and 46.7% for smaller firms – meaning Neil, who pays the higher rate, faces a scary rates bill. However, there is transitional relief to ensure he is not hit by the full rise in one jump.

Neil, who also owns the Upstairs at The Grill restaurant, said businesses were already coping with a hike in the cost of supplies.

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“The last year has been particularly difficult post-Brexit and the hospitality industry has been hit harder than most," he said.

What's hurting pubs in the pocket is that their rateable value is assessed partly on turnover not just what the premises could be rented for, which is the main factor with other businesses.

But Neil, who has created more than 200 jobs, says turn-over is not the same as profit and does not take costs into account.

‘We pride ourselves on our service levels, but that comes at a cost. Our labour costs are sitting at more than 30% of our revenue. The old adage that turnover is for vanity whilst profit is for sanity has never been more true.

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“And it really saddens me that particularly with pubs and bars that the government judges and penalises businesses with increased turnover – madness!”

He added: “The unprecedented rate increases are just the latest in a long line of challenges we are having to face and frankly this could represent the final straw for many small to medium size hospitality businesses."

Outside Telford's Warehouse are restaurant manager Francesca Pollard, with four-year-old Macy who is the daughter of one of the waitresses, owner Jez Horrill, assistant manager Guy Meek and general manager Nicky Wright.

Jez Horrill, owner of Telford’s Warehouse, agrees some businesses will be 'imperilled' by the revaluation.

He is facing a 107.5% hike in his rateable value meaning a bigger bill on top of extra costs like the Living Wage, which he wholeheartedly supports. He again stresses that the emphasis on turnover takes no account of costs, which for him includes hiring bands.

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He said: “I will say that I am very worried about the extent of the increase to Telford’s draft rateable value and feel that unless prices or business levels increase accordingly, we will struggle to cope with the new demands.

“I know that we are not alone in believing this to be a business-threatening imposition and hope that government will now take measures to avert the cliff edge scenario now facing many businesses.”

Mark Jarvis, owner of The Chester Fields restaurant at Bridge Trafford.

Mark Jarvis, managing director of The Chester Fields at Bridge Trafford, whose enterprise is designated as a restaurant, faces a 41.5% rise in the rateable value of his business.

He said: “Restaurants and bars are being hit hard in all areas. Already we’re feeling the effects of Brexit.

“We then have to deal with ‘lack of consumer confidence’ where people aren’t dining out as much due to fear of what’s to come. Certain parts of the country are down 50% on footfall.

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"The Business Rates is just another levy that’s been dumped on businesses. I only received a letter six weeks ago saying my rates are going to double in April. This is an increase of nearly £1k per month."

He added: “With the higher business rates it’s a dead cert that we will see many small, local city centre restaurants and bars close down whilst the city allows the large chains (who can afford high rates) to continue saturating Chester.”

Neville Sidebottom, co-owner of Artichoke Cafe Bar Bistro in Boughton.

Neville Sidebottom, co-owner of Artichoke Cafe Bar Bistro, by the canal in Chester, says the revaluation amounts to a ‘tax on success’ and says corporation tax and VAT is the way for businesses to pay their fair share.

Artichoke should see its rates fall slightly, but Neville said the system is ‘perverse’ especially in the way pubs are treated differently to other businesses, including restaurants, given eating places and gastropubs are often indistinguishable. “Every business should have a level playing field,” he said.

Landlord of the Watergate Inn Frank Marnell

Frank Marnell, landlord of The Watergate Inn, secretary of the local Licensed Victuallers Association, warns that 30 pubs a week are still shutting across the country and says there’s only one way for many publicans to make ends meet: “People will be walking into pubs and paying London prices.”

A government spokesperson said: “The Great British pub is a national asset, providing thousands of jobs and boosting the economy by £21 billion a year. The method of valuing pubs was agreed by the five major trade bodies and has not changed.

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“Following the revaluation, three quarters of properties will see no change or even a fall in their bills, and the small minority of businesses that face an increase will benefit from our £3.6 billion transitional relief scheme.”

Chester-based data analyst John Murray has assisted The Chronicle in the compilation of this article.

Aside from the licensed trade, he calculates that while shops in Chester city centre face decreasing rateable values, retailers in outlying areas like Hoole could see their rates increase as will stores in Ellesmere Port and Frodsham, which is the worst hit centre overall.

Data analyst John Murray Picture by Benjamin Hietzig(Image: Ben Hietzig)

But across Cheshire West, John says the current rateable value of all premises liable to business rates is actually set to decrease by 1.5% from £392,601,193 to £386,705,930.

It's a different picture across the country. He says England and Wales combined will see a 9.1% increase in total rateable value as a result of the revaluation.

The actual amount collected by Cheshire West and Chester Council (CWaC) in 2015-16 was£156,756,000 of which £75,852,000 was returned to central government for redistribution under the Uniform Business Rate scheme.

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