Inflation: The hospitality sector faces cost pressures

The pressure on small business owners shows no sign of abating despite inflation falling to target levels in May.

Inflation has declined significantly since reaching 11.1% in October 2022, a 40-year high.

However, this does not mean that prices are falling – they are just rising slower.

For Eamon McCusker, owner of Chubby Cherub and AM:PM restaurants in Belfast, cost pressures are the toughest he has faced in 22 years.

He said increases in wages, food and beverage and utility costs had a huge impact on the industry’s profitability.

He added that this has prompted many restaurants to decide to close because, despite heavy traffic, they are not making enough money to survive.

“There is huge demand and venues are doing well in terms of traffic and customer numbers, but they are not making any operating profit. Without profit you cannot survive.”

“In 2023, we saw electricity bills triple in one quarter at one of our properties, rising from £7,000 to £21,000. Now they are £14,000, still double.”

Unlike other parts of the UK, hospitality businesses in Northern Ireland do not benefit from the 75% discount on business rates bills applicable in England and Wales.

As part of this decision, the Northern Ireland Executive received compensation from Barnett (extra funding from the UK Government), but the decision on how this money was spent was up to the Executive.

McCusker said the sector in Northern Ireland needed support.

“What is really happening in this industry is that you are losing diversity, you are losing the heartbeat and soul of the industry, you will have the high street and communities with the big multinationals, but you will lose people like us – the independents.

“You can’t grow or plan for the future and then people make this terrible decision to close because it’s not working.

“Instead of growth, suffice it to say we just have to be here by next year,” he added.