A top TV chef says his Michelin star restaurant has made a profit of just £320 in the first quarter of 2023. Great British Menu chef Aktar Islam runs Opheem, one of five Michelin Star restaurants in Birmingham.
It charges £50 for two courses and £125 for its ten course tasting menu, but Aktar says high taxation is 'squeezing the industry to breaking point'.
Aktar told BirminghamLive that he wants to speak out on the matter in the hope of driving change for the hospitality sector, describing the situation businesses are facing as 'desperate'. He said that other high profile chefs are 'weeks away' from closure due to the Government taking what Aktar describes as a 'huge slice of the pie' from their enterprises in tax.
The news comes as one of Birmingham's biggest bars closed its doors for good, citing rising costs among the difficulties it could not overcome. Vinoteca stated that post-Covid difficulties, the financial climate and train strikes were all contributing factors in their decision to quit the city
Aktar said: "From the outside, the general understanding is that if restaurants are busy then they're very profitable. That isn't the case and it's important for the industry, and for me, to speak out about that.
"I've got a lot of friends in the industry and we're always honest with each other, but many chefs are scared to speak out, or pride gets in the way of them talking about the situation hospitality is in. Unless we're open and honest about what's going on, we can't push for change.
"We need people to realise how important hospitality is to the local economy. Speaking about this is the culmination of conversations I've had with chefs up and down the country, some of who are a couple of weeks away from having to close their doors.
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"They're worried about losing their homes, and some of them are high profile chefs. People don't realise how desperate the situation is."
Aktar says that he feels hospitality businesses are unfairly taxed and he warns that if that does not change, food and drink businesses will close for good, with no one stepping up to replace them.
He says: "The Government, as it stands, has an approach where they're just milking it for as long as they can. They think if one business goes, another will come along and fill the space. What I'm trying to say is that we'll end up in a situation where no one wants to come and fill their space. We'll just end up in the situation where no one wants to fill that space because who wants to get into a business or sector with no return?"
Aktar, who closed his city centre steak restaurant Pulperia back in September, gives an insight into what costs go into running a business like Opheem. He says: "Labour is a massive cost to us, as is the price of ingredients and energy. Then on top of that, you've got taxation.
"In the Irish model, food is charged at nine per cent VAT. They accept the fact that in hospitality, our VAT reclaim is very minimal compared to other industries because basically everything we buy in is VAT exempt, as soon as we touch it, it becomes VAT-able. We are a net VAT generator but we can only claim back two, maybe three per cent.
"We employ more people per pound of revenue we generate, as an industry. Hospitality is labour-heavy so you've got taxation on that, staff PAYE and their national insurance contributions. Then you've got business rates, they're higher for A3 premises than on office space, so hospitality is just unfairly taxed.
"Rather than taking a massive slice of the pie and killing the industry, the Government could take a fairer slice and keep the industry alive, vibrant and thriving.
"In the long term, it will be more beneficial. Employment will continue, businesses will continue to thrive and pump money into the economy. It's a much fairer and equitable situation for both parties.
"Whatever level you're at, small independently run businesses are impacted. It's an industry that's heavily led by passion and the desire to build and create something that reflects one's personal artistry.
"It's tough to look at an entire industry and see that it's being squeezed to breaking point. The metrics don't add up, it doesn't make sense any more."
