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“Thousands of businesses folding is a real possibility” say Food Industry Heads

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Restaurant and takeaway sector representatives have said thousands of businesses could fold during the Covid-19 pandemic. Leaders from the UK’s Curry, Pizza and Pasta, and Fish and Chips Industries shared their views on a recent forecast by the Federation of Small Businesses that a quarter of a million businesses could close as a result of the Coronavirus.

“I believe this is a real possibility for many of our members” the British Bangladeshi Caterers Association (BBCA) President, Salim Chowdhury told BritShish. 

“If we do not receive further support, our SMEs simply cannot continue to survive as they’ve all already strained themselves to their full extent in adapting to trade under lockdown.”

Jim Winship, the Director of the Pizza Pasta & Italian Food Association (PAPA), echoed these sentiments, saying, “We are anticipating a significant number of business failures, particularly amongst independent operators as they will face significant issues getting back up and running after the on-off lockdowns of the last year.”

“In addition to backlogs of rent that they may face, many will have used up their cash flow to survive and will struggle to get up and running again. Many in City centre sites may not see any recovery until people start to return to their workplaces in numbers – which is unlikely to happen until the Autumn at the earliest” he added.

A number of fish and chip shops could also go under, especially those who were struggling before the pandemic began. Andrew Crook, the President of the National Federation of Fish Fryers (NFFF), told BritShish, “We do think we will see some businesses close but the pandemic has sped up the decline of many businesses that were struggling pre-Covid. Any business that has not adapted to the environment are finding it difficult as consumers now expect a choice of payment options and to be able to order online. We are starting to see quite a few businesses going on the market as shops that were struggling prior to the pandemic are trying to get out. ”

Mr Crook, offered a glimmer of hope however, saying “Some businesses are more affected if they are in inner city locations or tourist areas so hopefully, they will bounce back when restrictions ease.  We are seeing the shops at the quality end of the industry doing well.”

When asked what further government measures the NFFF would like to see to support businesses going forward, he said “The government really stepped up when it was needed, the original grants, furlough, rent and rates support and of course the VAT reduction. For years we have been lobbying to try to get reform on VAT as we feel the way the current system works encourages fraud and penalises legitimate businesses.  If we were not overburdened by tax we could invest in our teams and help provide much needed employment. A lower rate with a lower threshold and on more products would help share that burden and help hospitality to assist in rebuilding the economy.  We have the perfect chance to change the system to encourage entrepreneurship and build hospitality back better! A return to 20% would destroy many businesses, this is not about reducing tax receipts but a plea to try to prevent a return to suffocating the very businesses we should be encouraging to grow.”

Both Mr Winship and Mr Chowdhury also made comments around VAT. “We would like to see the Government to continue to support small foodservice businesses with rates relief and the VAT reduction at 5% remaining to the end of this year at least.  We would also like to see some controls over landlords demanding back rents, ideally with a ‘pay as you grow’ approach and continuation of the furlough scheme until businesses are able to fully get back” the PAPA head explained.

“There are two crucial policies that I have advocated for to the Chancellor in both a virtual meeting and in an open letter on behalf of our BBCA members” said Mr Chowdhury.  

“First, the maintenance of the current VAT concession effective until 31/12/21. Second, a permanent VAT concession from 20% down to 10-12.5% for the hospitality industry, to not only survive but also recover from the disastrous impacts of these lockdowns.”

The Government has since extended the VAT cut for the hospitality sector, that was used during Chancellor Rishi Sunak’s Eat Out to Help Out scheme..

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