The price of eating out in London could soar by as much as 40 per cent as “close to unmanageable” extra costs are passed on to customers.
Leading restaurateurs say they will inevitably have to charge more just to survive because of the unprecedented “perfect storm” of cost hikes.
Food prices are already rising fast with supply shortages of ingredients such as sunflower oil since the start of the war in Ukraine. About half the world’s supply of sunflower seeds comes from Ukraine and Russia.
Energy costs are expected to rise further later in the year. Next month a temporary cut in the VAT rate for the hospitality industry during the pandemic comes to an end, restoring it to 20 per cent from 12.5 per cent.
Employers also face extra national insurance bills on top of wages that have already jumped because of staff shortages. Other costs such as rent and insurance are also heading up.
Hospitality businesses are furious that no new help was offered to the sector in the spring statement, though a previously announced temporary one-year 50 per cent discount in business rates kicks in next month.
Restaurateur James Robson, co-founder of Fallow in St James’s, said food prices were rising by between 10 and 50 per cent and that customer bills would have to go up by between 20 and 40 per cent this year — and could double over the next three years.
Mr Robson said his VAT bill alone will jump by £5,000 a week from next month. He will try to recoup about £4,000 of it by adding £2 to the price of top selling dishes such as cod’s head with Sriracha butter sauce, currently priced at £18.
He said: “We’re one of the luckier ones, with keys dates booked out a month or two in advance, but the cost headwinds are close to unmanageable without passing on some of the rise.”
David Moore, owner of Pied a Terre in Fitzrovia, said his utility bills were three times the £2,500 a month he was paying before Christmas and his rates will double when the 50 per cent discount expires.
He said: “People are going to see price rises across the board that are unprecedented otherwise many restaurants just won’t survive.”
But Sam Harrison, owner of Sam’s Riverside in Hammersmith, said customers were already feeling the pinch and may baulk at paying higher prices. He said: “Realistically we should add 15 to 20 per cent to menu prices just to put ourselves in the same place but I just don’t see how I can pass that on to the customer.”
