We’re not even a quarter of the way through the year and Manchester has seen a wave of beloved restaurants, bars and small businesses closing their doors. But it’s not just venues which have opened in the last few months that are shutting up shop, for the city has had to wave goodbye to legendary spots and Manchester institutions too. In the past three months we’ve seen the likes of The Font, Cocktail Beer Ramen + Bun, Ate Days A Week and now Sale Foodhall close, but what does this mean for the future of hospitality?
New openings and closures have previously ebbed and flowed as businesses battle it out through the market to prove that they have the ultimate USP. However, with Covid-19 and now the cost of living crisis, it’s an ongoing, unfair fight which many companies can’t seem to conquer, waving a white flag in the form of closed signs and sad updates on social media.
Why are so many Manchester businesses closing?
Towergate Insurance surveyed 750 small business owners from across the UK to explore the threats they’re facing in the wake of the cost of living crisis and the impact these are having on their businesses. The insurers found 67% of those in Manchester said they feel their business is at risk of closure this year – 10% higher than the national average of 57%.
According to research, the most common threats facing small business owners in the UK are supply chain delays. These come as a result of global shortages of materials, staff shortages and transport delays occurring at the same time as sharp spikes in demand, but that’s not all…
Many of us have felt the pinch this winter (and even going into spring) due to the rise in energy costs and food prices, and for Manchester businesses they are not immune to those issues either. Keeping the lights on, oven fired up and fresh produce at a high quality all come at a price. Some of these costs could be filtered down to consumers with dishes on menus seeing a price increase, but when you need to lure customers in during a cost of living crisis, it can be a risky move.
The same reasons for closures keep coming up again and again as it feels like each week there are hospitality businesses in Manchester announcing on their socials why they are closing. In January, pie makers Ate Days A Week said: “Food and drink costs are rising rapidly, utilities are absolutely out of control and the landscape of our economy is so obscured it’s frightening.”
Likewise, late night Northern Quarter spot, Cocktail Beer Ramen + Bun, said: “The business has been under massive financial strain, that we have unfortunately been unable to pull ourselves out of. The obstacles that have been affecting everyone in the hospitality industry right now. The cost of goods sky rocketing. Energy bills more than doubling. They’re all massive factors and they’ve all made it extremely difficult to continue doing what we love, without compromising on quality.”
With these shocking rises in cost of energy and food affecting business owners, the impact has resulted in many losing profit and revenue. The results come as no surprise with the rising cost of living directly resulting in supply chain instability and changing consumer demands.
Throw in labour shortages in the hospitality sector and you have an overflowing, bubbling pot of ongoing issues. According to CGA by NIQ, attracting and keeping staff has also come at a significant cost, with hospitality businesses raising their pay by 12% and 11% for new and existing staff respectively in the last 12 months – just ahead of the rate of inflation.
Are pop-ups the future?
With less overhead costs you’d think pop-up bars and restaurants or stalls at markets could be the way to go. But it’s not just the small business traders who are struggling as venues across Manchester which host them are finding it hard to stay open.
Most recently Sale Foodhall announced that it would be closing its doors this April. The food hall in Stanley Square, which is part of the Store Group, has said after “facing unprecedented cost increases over the last 12 months”, they are unable to “keep the business moving forward sustainably”.
Despite Sale being considered a more affluent area of Greater Manchester, the cost of living crisis has shown location isn’t stifling success but it’s the bills. Sale Foodhall said: “Rising costs, especially in terms of power, have proved insurmountable for us here in Sale.”
Yet, some hospitality businesses in Manchester have risen from being pop-ups to now having permanent sites, as opposed to closing down. Take Salt & Pepper, which started its days in the Arndale Market, moved onto Blackdog Ballroom before opening its High Street venue.
Then you have some businesses which have built up such a cult following or popularity that they’ve opened more venues in the form of pop-up traders at some of the city’s top food halls. From Herbivorous at Hatch to Noi Quattro at Society, another venue in this type of setting not only means less risk for the business but can also attract customers to visit their very own restaurant to see what more they have on the menu.
How can Manchester businesses remain open?
As you might have seen from many social media posts announcing closures, shutting their doors is the last thing businesses want to do. In a statement, Cocktail Beer Ramen + Bun said it broke their heart to have to make the decision and it did “not come lightly or without months of deliberation, meetings and rescue plans”.
According to a recent survey, the biggest risk to Manchester businesses is retaining uniqueness, with 34% citing this as an issue they’ve faced. With saturated markets in the city like pizza and burger restaurants it can be hard to make a name for yourself and prove you’re the better choice. But then there are your only-visit-once spots and ones just too niche that they lack the longevity.
Hospitality businesses have proven to be incredibly resilient and have adapted their operations in a range of different ways. With customers having less excess money each month, dining out has become a bit more selective as they search for cheap and cheerful meals or choose to go out for food less frequently.
Back in January, we saw an influx of businesses advertising dining offers, including 50% off food bills, in order to entice us out post-Christmas and New Year. Searches for “restaurant offers” were at their highest during the first week of January, but with financial difficulties continuing, we’ve seen the offers continue into February and March to get bums on seats. But, of course, it comes at a cost to keep both customers visiting and the business afloat.
The ‘State of the North’ research from Northern Restaurant & Bar and CGA by NIQ revealed that restaurant and bar sales growth since 2019 has been ahead of the GB average of 4.1% in most key northern cities. Average sales per venue in York were 16.0% higher in 2022 than in 2019, and growth in Manchester (6.9%) also outstripped most cities – including London, where sales dropped by 6.5% vs 2019.
Research might be showing that Manchester is on the up, after all winter is the hardest storm for hospitality to get through, but it seems supporting the independents we know and love is one of the best things we can do. Our purses might be feeling rather light right now but ordering that local takeaway and eating out at that family-owned restaurant could be the decider on whether that spot can stay open for another day.