What Dies With Hospitality?

There is a version of this story that can be told in numbers alone, and it is a story worth telling. Since the October 2024 Budget, the hospitality sector has shed 170,000 jobs, accounting for 53% of all UK job losses across an industry that represents just 7% of the economy. Four hospitality businesses are closing every single day. The sector is losing employment at seven times the rate of the wider economy. These are not figures that can be explained away by changing consumer habits or shifting tastes; they are the direct consequence of a policy environment that has stacked employer National Insurance increases, National Living Wage changes, and business rates pressures onto a sector already carrying energy costs running 60-70% above 2019 levels, at an estimated additional annual burden of £3.4 billion.

We know, you’ve seen those numbers before. Yes, they’re important. But the repetition risks desensitising us to the real story. When a neighbourhood restaurant closes, it does not merely remove a place to eat, or even the livelihoods of the owners and staff. It unravels a web of relationships that most people walking past the darkened window will never have thought to count. A single independent restaurant of the kind you are about to read about weaves together a whole network of suppliers — growers, cheesemakers, winemakers, bakers, farmers, importers — producers whose own viability and jobs are bound up in exactly this kind of network of loyal, direct, values-aligned relationships. When a hospitality business closes those relationships dissolve. For many of the suppliers on the other end of them, the cumulative loss of accounts like this one is the thing that eventually makes their own livelihoods dissolve too. The closure of a local restaurant is rarely the end of one story. It is usually the beginning of several others.

Each establishment which closes had its own regulars who came to mark the ordinary and the significant moments of their lives, each street loses the thing that made it somewhere rather than just somewhere else. Independent hospitality has always been something that economists struggle to fully value precisely because so much of what it does is not legible in purely commercial terms: the function it serves as a gathering place, a source of warmth, a social infrastructure for people who may have very few other reasons to leave the house. But the cost of losing it is real. It may not show up neatly in a spreadsheet as a direct money in / money out equation, but eventually it certainly does show up elsewhere. 

What does show up in data, with increasing urgency, is the effect on young people. And that is expensive. Hospitality is the country's largest provider of first jobs, asking for no qualifications, no references, no track record, operating in every constituency in the country. It is where a generation has learned to show up reliably, to work within a team, to manage pressure and people and come back the next day: the roots, in other words, of an entire working life. The NEET count has now passed one million for the first time since 2013, and the government's own Milburn Review names the decline of hospitality vacancies as a contributing factor - a direct cost link back to hospitality. The cost of rebuilding those lost foundations through welfare, health services, employment programmes and more will be measured in decades and in billions, long after the last independent restaurant has closed.

What a VAT reduction would actually provide is not a windfall or a subsidy, but something much more modest and much more meaningful: enough breathing room for an independent business to take on someone who has never worked before, to honour the relationships with suppliers that keep a much wider ecosystem alive, to absorb a bad month, keep the doors open and keep our communities alive.

What follows is another version of this story, which adds context to the data: Flat Earth Pizza, shuttered this year in spite of its beloved community status, in spite of the accolades, in spite of the steady stream of people through the door. It’s told by the person who lived it — not as a case study, but as an account of what a restaurant actually is, in the fullest sense of that word, and what it means for everyone connected to it when it is gone.

The Trees That Fed a High Street

By Rich Baker and Sarah Brading, Flat Earth Pizza (2020 - 2026)

If you cut a ring around the bark of a tree, it will die. It may take months, even years. The tree will draw on its stored energy to sprout new leaves, and a passer-by might not notice the decline until, one day, it's simply gone. Without a functioning root system, the whole ecosystem it supported collapses with it.

A humble tree has more in common with the hospitality world than a lot of passing foot traffic may think. A world Sarah and I were proud to be part of for six years at Flat Earth Pizzas. Our hidden root system was our wealth of suppliers. Our mantra was to use local, and in our small independent restaurant alone, we wove together more than thirty individual suppliers. We knew their names: Steph at Cacklebean, Oscar, Max and Tom at Gilchesters, Giovanni at La'Latteria. The list went on and on.

The death of our little tree, Flat Earth, has left an uprooted hole in the high street — a place where our locals came to gather, to find a moment's solace from the world outside, to celebrate marriages and birthdays, to navigate first dates, and mostly, to be warmly embraced by a team who were the sturdy branches of our tree, providing the nutrients and sunshine that let us grow on our corner of the high street in East London.

When we count back over the people we touched, ‘our leaves of that tree’ the reach was something close to half a million individuals, each one part of a flourishing canopy that kept us alive through every season.

We knew the impact we had on our customers, and theirs on us, because the outpouring of emotion when we announced we'd have to close — for lack of further funding — was beyond comprehension. In our last month, sales rose by 80%, and the stories came thick and fast: the regular who swore she needed our pizza while she was in labour; the customer who worked out how to bring our dough back home with her to the US; the people who came seven days in a row at the end, baffled, bemused, and a little angry that their busy local hotspot was being taken away from them — because the cost of being a community-spirited local pizzeria had finally outweighed the reward.

Should we have mentioned, as we sat you down at your table, that around 30% of your bill never reaches us at all — it goes straight to local and national government via National Insurance contributions, business rates, VAT, energy levies, and the rest? And that the remaining 70% is what lets you have the excellent service from our long-standing, brilliant team — or lets Jack, our local wine supplier, drop off six bottles of Pinot Noir because he knew our customers would love it with their pizza?

If we were a book, the final chapter — the acknowledgements — would be the longest of all: a ginormous list of everyone who helped make this restaurant happen.

What we're left with is the unfathomable short-sightedness of a tax system that puts every high-street eatery on the edge of closure — a VAT charge we cannot claim back, because there's no VAT on food invoices, unless we package everything up into a warm sausage roll and sell it to go. Then, apparently, we can hack the system and go VAT-free.

We are a nation of shopkeepers no more, funding a government that doesn't seem to understand that shopkeeping is so much more than the provision of a product to a customer. Amazon can do that. Independent hospitality has become a shrinking forest with shallow roots, unable to grow for our generation or the ones beyond it.

There are over three million people currently working in hospitality in the UK — earning and spending their wages, keeping the cogs turning, and topping up the Treasury's coffers in the process. The UK restaurant and pub sector generates roughly £100 billion in income, while paying around £40 billion in tax receipts.

Amazon, by comparison, employs 75,000 people and generates around £30 billion in UK sales — and, by most measures, pays considerably less tax for it. The point worth making is this: for Amazon's sales to match hospitality's, which they soon will, the company will need only 150,000 staff. Food and drink move from the high street into the home, and a workforce of three million people becomes redundant — not because hospitality failed, but because the sheer scale of frictionless product sales has overtaken what the high street offers.

Our little tree has died — from the roots up. From the thirty honourable suppliers and their teams who harvest the corn and make the cheese, to the faithful ten people we employed, to the half a million people we served in our lifetime.