A hospitality expert has delivered his verdict on how Nottingham's restaurants and venues could change in the future on the back of the recent closures in the city due to 'skyrocketing' running costs. Guy Lincoln, a hospitality reasearcher at Nottingham Trent University, has explained why the the industry is now facing the "perfect storm" - and how a city like Nottingham could potentially see a complete highstreet reshuffle. Olimpia Zagnat reports.
The hospitality industry has been hit by "significant" rise in costs - and "you would be stupid to think otherwise", says Mr Lincoln. All the costs that come with running a business - from energy bills to supply - have gone up, creating what the expert labelled as a "perfect storm".
"It is well known that the biggest kind of challenge for hospitality businesses is cash", Mr Guy said. "It is not profitability or anything like that.
"It is a cash-rich business - it costs a lot of cash to operate. And lots and lots of businesses go bust because they do not have the cash to operate."
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But the rise in running costs fiasco comes after a pandemic which hit businesses across the world and locked people into their homes. "The problem that we have now is amplified because all these restaurants have used all their spare cash getting through the pandemic", the expert added.
"So if it had been without the pandemic - they might have had enough cash to survive this scenario. When you add that to the running costs that have gone through the roof - you have the perfect storm."
In Nottingham, a number of well-established restaurants have blamed the rise in running costs for closing their venues. The owner of award-winning Indian restaurant Masala Junction, in Carrington, delivered the devastating news last week, saying that the cost of running a restaurant has "nevertheless skyrocketed".
Some reports suggest the UK’s annual inflation could go as high as 15 per cent by the start of 2023. "That is essentially where all your profit comes from", Mr Lincoln explained.
"If your costs of food go up by 15 per cent, your menu prices have to go up significantly, more than 15 percent, to recoup that. Your customers will also face price increases so you [the owner] have to absorb some of the costs."
On top of the present and future crippling prices, another challenge hits businesses - the cost of labour. The expert described the staff-shortage crisis as a "hangover caused by both Brexit and the pandemic".
"There is a significant staff shortage which means that business owners have to increase their pay to recruit staff. Obviously, during the pandemic, hospitality was shut, and lots of people left the industry and they have not come back.
"When you add up all that - it is a massive hit. If you are a restaurant you will either generate more income or increase your margin, and both are difficult. People are eating out less, they are spending less anyway - so increasing costs becomes more difficult."
The expert identified Nottingham as a "tier two city" for chain restaurants - which means established companies would look at opening venues in cities like Manchester or Liverpool before taking our city as an option. This puts local businesses at the forefront of the industry locally.
Unfortunately, local businesses felt the crisis even more - as many of them had to use their cash during the pandemic. "The only restaurants that are going to survive this economic crisis are the ones that have investments, so the chain restaurants, because they have the cash", Mr Lincoln added.
"My understanding of Nottingham is that it is more of an independent scene. So it is knocking them harder because there is more independents in Nottingham."
However, the expert said he is "amazed" by the number of new venues popping up on high streets. He added: "But on the start-up level, the crisis does not seem to affect them so much. It is not stopping people from opening businesses.
"If anything, I think we might see quite a lot of churn. So there might be new places opening up, replacing the old ones - history might look different. And maybe not the ones we recognise."
Another possible saving grace could be the growing hospitality market targeting students. Home to two large universities - Nottingham Trent University and the University of Nottingham - the city has a number of venues which welcome students.
Bradley Llewellyn, general manager at Blend in the thriving Sneinton Market, said they are a "student-friendly" venue. The 25-year-old added: "The students coming back to the city is definitely a saving grace. They are loyal supporters of local, independent businesses.
"In the way we tackle the rising costs, we just look at cheaper alternatives. Obviously, we do not want to sacrifice the quality."
Sneinton Market is surrounded by local, independent businesses. Aaron Bulley is assistant manager at Fox and Grapes, a pub located in the "heart of the community".
The 35-year-old added: "It is going to be difficult going into the new year. People are going to down their spendings to make sure they make it through the winter.
"From a business point of view, we are looking at areas that we can make cuts, like washing or cleaning. We are just doing what we can.
"The community here really support local businesses. And we are lucky that Sneinton Market is thriving. We have got some loyal customers and it is that kind of pub in the heart of the community. "
Hilary Silvester, executive chair of Nottingham Civic Society, has also given her points on how the hospitality scene in Nottingham is changing. She added: "The effects on Nottingham's hospitality industry are certainly very serious, particularly as it is now such an important part of Nottingham's economy, and its decline could have such a detrimental effect - just as it seems that the city is getting back on its feet after a few very troubling years in many ways."
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