Johanne and Dave Banks have tried everything to keep their business afloat. Halloween parties, craft events and live entertainment, but to no avail.
Last weekend, the couple confirmed their restaurant and bar, Crowded House in Bury, would be closing at the end of January. The much-loved dining spot has become a go-to in the area, but after ten years on Manchester Road, its owners have called it quits, telling customers that every cost ‘seems to be going up’.
The couple are understandably very emotional, but said the decision had been ‘a long time coming’. “I’d say the year after Covid, it didn’t feel sustainable, we put our own savings in and did the bounce back loans but it’s a false security,” she told the Manchester Evening News earlier this week.
READ MORE: Iconic Greater Manchester bakery warns: ‘no one is safe’ as it makes heartbreaking plea to customers
“People’s habits have changed, initially it was the fear of going out and getting back to normal after Covid, then more recently it’s been the cost of living crisis and people having to make cut backs. For us, it’s the increase in utilities that’s the biggest factor – we’ve tried everything to keep the wolves from the door.”
Head chef Darren with owners Johanne and Dave Banks who set up the restaurant in 2015
(Image: Crowded House)
Giving customers an insight into the challenges they, and many other small independent businesses have faced over the last few years, the couple explained that their utility bills had increased by 55%, food costs by 38% and insurance bills by a staggering 327%.
As well as a steep increase in general running costs, they also drew people’s attention to a series of new tax hikes that were announced by the Chancellor, Rachel Reeves in the Budget at the end of October, describing the incoming rise in National Insurance Contributions (NICs) and National Living Wage as ‘unsustainable’.
In terms of what their closure means for the wider hospitality industry over the next few months, Johanne said she thinks the sector is in a ‘bad spot’.
“The industry hasn’t ever really recovered from Covid, and it won’t until it gets more support and people are given the space to get back on their feet. I don’t think we’ll be the last to close in our area,” she said.
The writing’s on the wall
Their issues are not unique though, they are endemic within a sector that has felt the full force of the pandemic, Brexit, cost of living crisis and inflation over the last five years. What is concerning is that well-established, long-standing businesses are now having to call it a day.
Earlier this week, award-winning deli, Off the Wheaten Track in Altrincham closed its doors after six years. Owners Hayley and David Hadfield explained that while they had survived Covid, energy hikes, constant price increases and the cost of living crisis, the uncertainty over increasing costs has cemented their decision.
Hayley and David Hadfield have announced they are closing their award-winning deli business Off the Wheaten Track in Altrincham after six year
(Image: Off the Wheaten Track)
“To be honest the recent government budget, business rate changes and rental increase has created cause for concern, making us seriously consider our future as business owners,” they wrote on social media.
Meanwhile, Slattery in Whitefield, an iconic bakery and tearoom, issued a stark warning to its customers, telling customers that “no one is safe” amid the rising costs crippling the hospitality industry. They told their followers on Instagram that the combined challenges they are now facing are “the worst we’ve ever experienced” in 57 years of business.
They pointed to cocoa prices soaring to record highs, the cost of flour rising by 40 per cent in the last year, and shared that their own electricity bill “now exceeds £10,000 a month, and energy costs continue to rise”.
They also warned that changes to National Insurance from the Labour Government “will add £55,000 to our yearly costs, this year alone.”
Sacha Lord’
(Image: Darren Robinson Photography)
It’s something Greater Manchester’s Night Time Economy Advisor Sacha Lord is particularly worried about. He warned earlier this week that the tax hikes and reduction in business rates relief come April could spell further woe for the sector.
Expressing his concern following a ‘raft’ of closures, he said: ” Many Government meetings are taking place this month, but sadly the writings are already on the wall for many.”
Speaking to the M.E.N. he said that he was surprised to see so many closures only a few days into the New Year and that the government measures coming into play in April could be the ‘tipping point’.
“The issue is the biggest VAT bill for businesses is due at the end of January, but on top of that there’s the reduction to the business rates relief and national insurance contribution increases which will be a massive kick in the teeth. We’ll see more closures now than during Covid.”
‘The Latest Blow’
In October, Rachel Reeves delivered her first Budget following Labour’s election victory earlier that summer. The chancellor laid out how she would raise £40 billion a year in extra taxes during her speech to MPs in the House of Commons and said the measures were necessary to address the “black hole” in the public finances left by the Tories.
Reeves maintained her promise not to hike taxes for working people, but confirmed plans to raise employers’ National Insurance contributions from 13.8% to 15%, while the threshold at which businesses start paying National Insurance on a workers’ earnings will be lowered from £9,100 to £5,000. She also confirmed changes to the National Living Wage and Minimum Wage too.
For those 21 and over, the National Living Wage will rise by 6.7% to £12.21 per hour from April. The rise was higher than the Low Pay Commission’s central estimate of 5.8% which was set out in September 2024, and above the inflation rate at the time of the Budget.
(Image: Getty Images)
Meanwhile, the Minimum Wage rate for 18-20-year-olds will rise to 16.3% to £10 per hour, and the 16 to 17-year old rate will rise 18% to £7.55, with the same increase applying to the apprentice rate. Trade body UKHospitality called it ‘the latest blow’ and said the increases in national living wage and minimum age will add £1.9bn to the hospitality wage bill.
“Rising taxes, increasing costs and fragile consumer confidence risk bringing growth to a grinding halt,” warned Kate Nicholls, chief executive of UKHospitality.
Also impacted by the Budget is business rates support. Before the Budget there has been calls for an extension to business rates support, with the current relief due to end on March 31 this year.
The Chancellor extended the relief but at a lower rate. Currently the sector receives a 75% discount on business rates, worth up to £111,000, but from April, that discount will be reduced to 40%. While she also promised to reform the business rates system – a Labour Manifesto promise – this is not expected until 2026-2027, and for many businesses that are just about hanging on, it will be too little too late.
It’s a risky move from the Chancellor, especially given warnings by the likes of accounting firm Price Bailey, who projected that one in 10 British restaurants are at imminent risk of closure. And the Centre for Policy Studies have said the next 12 months will be the most expensive on record for businesses that are reliant on low-wage workers.
“I might as well sell up and close it down”
Someone who is used to the peaks and troughs of running a hospitality business is Mark Wrigley, the co-owner of Atlas Bar, just beneath the train station on Deansgate. He says that despite the mayhem created due to the roadworks in December, people still came out and spent money, but that challenges remain.
“We did alright over Christmas actually, but that said, the margins over the last few years have been continually squeezed,” he tells us.
Speaking about the costs he’s facing going into 2025, he say ‘there’s a lot to consider’. “Our energy is now more than double than what I was paying before, so I was paying around £1,000 a month and the latest bill was £2,500, so that’s £1,500 I need to find.
“Everything has gone up, inflation has too, four years ago a full English was £8.50, now it’s £14.50. I still have the same customers enjoying the same breakfast but taking 30% more revenue, but I’m not making more money.”
Mark Wrigley, the owner of Atlas on Deansgate in Manchester City Centre
(Image: MEN)
The general increase in running costs is one thing, but the Budget now means that Mark is having to make a lot of tough decisions about how to run his business going forward if he wants to survive.
“I’ve got 27 staff, some full time, some part-time, nine of those staff currently don’t attract National Insurance contributions from me because they’re below the threshold, but the rules are changing, so everybody is now in it and then the rates go up. I’m looking at needing another £24,000 a year – it’s heartbreaking.
“I haven’t got an issue with the national minimum wage going up, but because the NICs contribution increase is a killer, and that’s even before we come onto the rates relief changes.
“They’re reducing the relief rate to 40% and that’s another £12,500 to find. Then you have employers pensions, that’s now £2,000 a month, and I’m still also paying Covid loan back too.
“If I look at what the Government is forcing on all businesses, but especially on small, independent businesses, it’s crippling. I’m basically going to be making no money from April so why am I doing it? I might as well sell up and close it down, but I’m not going to do that because I’m a fighter.”
Mark has started to look at staffing and says he won’t be replacing some roles than have become vacant. A few years ago, he applied for a license to open at 8am instead of 10am to catch morning commuters, but says with the pandemic, inflation and the upcoming tax hikes, they may now open later on some days to offset staffing costs.
“The landscape is uncertain”
Taking a big picture view of the current landscape for hospitality, Tampopo restaurant owner David Fox says you can look at the situation from either a ‘cup half full, or cup half empty’ perspective. Speaking from the flagship site on Albert Square, which he proudly established in his home city 27 years ago, he says there are reasons to be optimistic about the future.
“One of the positive things that came out of last year was that inflation came down, so a change of government and lower inflation brought some optimism,” he says.
“Inflation was brutal for our customers and for us and that meant margins were eroded and sales were depressed. Post-pandemic there was a lot of excitement about going out, so our sales were generally good, and any inflationary pressures were soaked up by higher sales.
“The inflation came in at around 10-12% and the painful thing about that is that some businesses like ours were completely strapped by energy costs and food inflation and those were the same things that our customers were being hit by.”
Though inflation has come down, he says that Rachel Reeves’ Budget may present the next challenge for the industry and might have been a ‘gamble’.
“The minimum wage going up for example will add about £50-60,000 a year to my costs here at this site. I have six sites, so that’s £360,0000, I didn’t make that last year and with I’m still paying off my Covid loan and I’d like to invest in my site and my teams, so it’s a very difficult equation.
Tampopo owner David Fox
(Image: Manchester Evening News)
“Meanwhile, all the National Insurance contribution increase will do is erode that even more. The gamble Rachel Reeves took is that if that comes with increased consumer confidence then it can soak it up, but if it doesn’t we’re in a bit of a pickle.
“I do believe she slightly over-egged the budget, so that even in the news today, the 30-year borrowing rate is higher than it’s been for 25 years and even when Liz Truss came out with her budget. I think that’s a worrying statistic, and will impact what people perceive they can afford.
“Whatever your income bracket it’s become more expensive to go out and operators are still having to work really hard to remain good value. People have had less money in their pockets but that has changed over the last year and with inflation coming down you would hope we would all feel a little better off and feel like we deserve a treat, but the landscape is uncertain.”
David remains positive though and believes incentives like Tampopo’s budget-busting lunch deal will still entice returning office workers. Echoing calls throughout the hospitality industry last year though, he thinks another look at VAT is still needed.
“The positive is Manchester is a great city and people like going out, but what we’ve got to try and do is create this environment and culture for that to happen. Unfortunately, we are one of the highest taxed countries in Europe when it comes to eating and drinking.
“We pay more than double in terms of VAT than other European countries, alcohol duty too. The glass half full cup is this is a great city and lots of reasons to come here, there will be some that thrive, but some good businesses that can’t make it stack up and throw the towel in.”
“It’s a lot for us to take”
In October, Jonny Heyes and his wife Charlotte celebrated 20 years of Common, their successful bar on Edge Street in Manchester. He says some of the tax increases announced in October were expected, but that they’re still ‘a lot for us to take’.
“We’re a people-centred industry, we employ a lot of people, and a lot of them are on minimum wage so that has a big knock on impact on our wage structure,” he reflects.
“I’m conflicted because we want to pay our people as well as we possibly can and we want to be a great employer, but it does put stresses and strains on the business. Also, the change to National Insurance thresholds from £9,000 to £5,000 costs about £600 per employee so that alone will cost us £100,000 a year, which is a lot, we’re not in an industry where we’re rolling about in cash.
“We’ve had a tight few years and we’re still carrying debt from Covid, had inflation pressures, electricity pricing, it’s still tough to recruit, so this year is going to be challenging. We’re reasonably well placed to weather the storm but we will have to adapt, it makes you think twice about how many people we can employ and other considerations.
Jonny and Charlotte, owners of Common Bar, and home to Nell’s Pizza
(Image: Kenny Brown | Manchester Evening News)
“It is difficult though for a small business, reducing costs might mean owners working more hours or not employing as many people and that does have a knock-on effect on the general economy too. If businesses save money by closing more days of the week, that’s not good for a city centre economy if it’s food and drink businesses are closed for half the week.
“That said, consumer confidence has been a real issue over the last few months, especially since financial issues and it’s made people very wary about spending, whether that’s drinking less, going out less frequently, all of those types of things put pressure on hospitality so the idea that the general public might have more money in their pockets due to the Budget can only be a good thing.”
In terms of how hospitality responds to the latest challenge, Jonny says it’s about having a flexible business model. “Can you spend less on the goods that you’re reselling, can you spend less on labour, because there’s a lot you can’t change like rent, rates, electricity, but there are businesses like us where we can try and flex a bit, or invest in technology to make things a bit more efficient.
“There are some positive trends for hospitality businesses, like people coming back to the office – or compelled maybe – and I want to see as many people in the city centre as possible. It’s good for everybody to be in a really vibrant city and not just on a Saturday night.
“I’m conscious not to sound like we’re moaning as an industry too, because all sectors have their difficulties and challenges and you can set your watch by it, ‘oh this the time when all hospitality businesses come out and moan’, but it is tough and Covid hit the sector particularly hard.
“Unfortunately though, there are going to be businesses that can’t adjust their business model or make the changes quick enough. There’s a lot of people with a lot of fatigue from the last few years and they may just want something more secure.
“However, I do have a feeling of nagging optimism though, I do think things can improve. We are in a better place with inflation, people are getting a little pay rise, and if we could have a period of stability. Confidence is the main thing for us, but time will tell.”
What the government has to say
Regarding the Budget, a government spokesperson said: “A thriving hospitality sector plays a crucial role in growing the economy and features at the heart of our communities.
“We have ensured that more than half of UK employers will either see a cut or no change in their National Insurance bill from April, and we are providing 40% business rates relief ahead of introducing a permanent, new lower business rate from 2026. We’re also tackling anti-social behaviour and addressing empty properties to support entrepreneurship.”