Tom Kerridge REVEALS What Destroys the Hospitality Industry

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0:33What a finish. There's no doubt about it. It just tastes better. Match days deserve Pepsi. Let's talk about employment and youth unemployment particularly, right? Because we are meeting and recording on the day that unemployment in the UK has gone to 5%. And what I was really struck by that is that youth unemployment has gone up by a quarter of a million in that. So those under 34. Actually, those over 35, employment's increased only by 18 ,000, so not a lot. But I was just so struck by that, that we now have a million people under the age of 24 that aren't in education, aren't in employment. Like, it's a huge challenge.

1:18Like, what do you make of what the government's been doing? Well, in all honesty, I mean, it's not just this government, it's an excessive government. Hospitality is one of the major employers of young adults. It is one of those spaces, it's that transient crossover industry where people will leave school, college, university, even have jobs whilst they're at school or college or university, working in hospitality, because it is flexible it does work like it's almost operational for and i'm 16 hours of the day if not more um where uh part-time staff the industry used to rely on the part-time staff energy um and the people coming through and those people coming through we'd see hospitality is one of those great chances for meeting growing becoming you know helping them to become complete young adults because if you think of 16 year olds to 24 year olds a lot of the people that they generally spend their time with their peer groups they're all the same age mostly all with the same sort of interest and the same sort of backgrounds and then the adults that they have conversations with and they spend time with are their parents their parents friends or college lecturers or perhaps some form of sporting coach and that's it after that there isn't much in the way of being opened out to the rest of the world.

2:50So hospitality is one of the most inclusive, embracing, culturally rich, diverse, incredible industries to be a part of. It is no difference to age, educational backgrounds, race, religion, financial background. None of those things make any difference. You come into hospitality and everybody's there and sole purpose of cooking and serving and making sure that guests have a great time. Now, all of that means that there's so many different people with so many different experiences from, you know, young 16-year-olds all the way up to 50-year-olds that are still in the business. And you still go, you know, and then on top of that, you then get to meet guests that are completely different.

3:37All the guests are not the same age and they're not all from the same back. They're all coming because they enjoy eating out and being in spaces. Now, that could be in a restaurant like this or it could just be in the local pub people are different or a really busy town center bar or a hotel that's seasonal where people are coming in from all over because they're going down to Cornwall for example you know and they can come from one so these are great opportunities that hospitality provides or used to provide for young adults to be able to get to that position however since hospitality in the last four or five years has become hugely pressurized, the ability for it to work as a business in those costs, what happens is when people are leaving the businesses and full-time members of staff, they're not getting re-employed.

4:20You would have heard it many, many a time where operations are going from, even in busy seasonal spaces, are going from seven-day weeks to five-day weeks because they cannot afford to have the staff for seven days when you talk about the minimum wage and those periods. Those quiet periods on a Monday lunchtime or a Tuesday lunchtime where you'd normally open and just exist. But actually, people complain about the cost of a pint of beer, maybe in London, I don't know,£8,£8.50, whatever it might be. But we're paying, I don't know,£13 for a minimum wage. Well, that's, you know, you've got to drink quite a lot of pints before you're even paying somebody the minimum wage.

4:54So actually, on a quieter lunchtime, most places are going, actually, well, we'll shut those two days, which then means that it just drops into full-time staff operating over a four - or five-day period, as opposed to then being topped up by transient, maybe zero hour part-time. So zero hour was always seen as a bad thing, but in hospitality, zero hours was, we have never enough staff. We were always busy. You would always have loads of work. It's no problem. Now it's like, actually, there's nobody on those contracts. Everybody is about full-time members of staff and you're trying to make that work.

5:23And the people that then lose out are the young individuals that you would take on that would come in as a small risk to the business because it's about training and training takes time and it takes somebody out of a business where they could just be operating and making their thing. Actually, if you're showing somebody and teaching them the skills, that is a cost to the business and the time that needs to be spent. So all of that kind of gets stripped back as you de-skill, de-escalate. And then the knock-on effect of that is that young adults are not getting employed in hospitality. And what are the other cost pressures that hospitality is facing, right?

5:57Like you also had the pandemic, which was, you know, tested everyone. but in particular, it's hard to think of an industry that was affected more than hospitality during that period. Yeah, so when the pandemic came in, hospitality was hugely affected. But the one good thing that previous government did when Rishi Sunak was Chancellor was, it took a long time for them to listen and hear. But in terms of the furrow scheme, that doesn't just help us as an industry, and it helped everybody. that was something that okay that means that we can and we topped up lots of wages everybody's wages and i'm sure lots of other people did exactly the same but it you were like okay so that's now working there's a workforce that after the first three or four weeks of the frightening bit was like okay you've all you're all getting paid you've all got jobs it's okay it was the reopening bit how do you do that and then there was the help out tweet out scheme then there was the reduction in vat so it felt that there was okay there's it there's an opportunity here for us to be able to exist as a business.

6:58There was the civil zones. There was the things that started coming through that felt like there was help. Since then, all of that has disappeared. That scaffolding that has been put around those businesses has completely been taken away. And you're left with rising utility bills through energy costs that have gone up. I mean, probably in some cases, 80, 90, on average, I think it's around about 70 % utility bills. Food inflation, that has gone in some cases for certain items, beef, veg oil, two of the mainstays that go into a fryer and most people order a steak or burgers, have gone up nearly 100 % in the last five years.

7:39So many different other things have dropped in through food inflation. So that on average is around about 40 % since the last five years. National insurance, minimum wage, and then things like business rates. Now, all of those are the numbers that have just affected that back end to the point now where hospitality just doesn't work. It would operate even on the busiest times in the greatest spaces. Hospitality, it would be lucky at the best times to be operating at a 10 % EBITDA. So you're going, OK, and that's at the best time. Then it starts getting eroded and the margins start disappearing.

8:15And 10 % sounds, I mean, actually, there's a lot of businesses that would look at us and go, what on earth are you doing it for 10 % return? Like it's nothing like in hospitality, you're doing 10%. You're going, all right, we're doing okay here. The reality is, and that's now disappeared and gone. There's many operators that are operating at two or 3%. Some, myself included, that are operating around about 100 % cost. One of our businesses is about 115. So there's many spaces that are operating like that because of those costs that have come in, where you've got higher wages, where you've got the utility bills, where you've got food inflation, all of that.

8:45And that isn't a cost that you can pass on to the guests because the guest is still there. Our numbers are down probably around about 15 % in terms of bums on seats, because all of those things are affecting the guests as well. But our spend is probably down on average about 20%. So if your spend is down 20%, your costs have gone spiraling up. You are now left in an industry that is stagnating and going backwards. You're kind of a labor man. you signed the sort of Labour supporting Keir Starmer coming into government etc. Why do you think they're not listening and getting it? Well there's two things on that.

9:25I come from a single parent working class background in the middle of Gloucester. I've always been a Labour supporter because I fundamentally believe irrespective. It's a bit politics is it's like a football team you can support football team but you can say that they're wrong. You can't just outright go, yeah, yeah, no, they're the best, they're the best. Well, they're not. They're getting this bit wrong. This is very, very wrong. The fundamental basics of what that football team stands for or what a Labour Party stands for, I believe in. I believe in a healthcare system. I believe in transportation.

9:56I believe in education. I believe in opportunities being presented to everybody, irrespective of backgrounds. I believe that everybody should have a fair crack of the whip. And I know the reality of life isn't like that because it just isn't. But that doesn't mean to say that if you come from a background where you are economically challenged, that you shouldn't be presented with hard work and ethics, that you're set up to fail. You should be given those opportunities. And I fundamentally believe that the basics of the Labour Party, that is where it sits. Then in terms of conversation with them regarding business, now I've been lucky to speak to previous government and this government, and I've been able to speak to front bench ministers.

10:34Now, many of them know and agree that there is a problem and it's the VAT system that is sitting incorrectly within hospitality that needs saving. Now that could come from whether it's business and trade, culture secretary, whether it comes from Andy Burnham, who is, you know, was already announced six, eight weeks ago, stood there saying hospitality needs to be looked at for a reduction of VAT. And these things are really, really important. They do understand. And I imagine you know politics way better than me, that most people, irrespective of party, politicians want people to do well. They want their businesses to thrive.

11:09They want the healthcare system. They want people to not be on waiting lists. So the only way that those politicians can get those things done, as you're a minister of those particular spaces, is through money. And the one department that holds all the purse strings of that is Treasury. Now, it doesn't matter how many times people will say to somebody, I need more money and we need to be able to do this. Treasury have the purse strings. They're the ones that will make ultimately the decision of whether it's a policy that will work or not work now you then from my understanding from the conversation that i had and the way that i'm working towards building a campaign launching and moving forward that the understanding of driving hospitality vat down to 10 we have to present a model that isn't just giving 10 off it's actually about growth it's about prosperity it's about reinvestment it's about um youth unemployment it's about all of these things it's about giving green shoots that runs much deeper than just a pub getting 10 % off its VAT.

12:07It's so much more fundamental to the basics and the infrastructure of communities and society. So those are points that need to be pushed across, and it's modelling that needs to be presented to Treasury. So people will say, well, aren't they listening? Actually, they are listening, okay? But you just don't go out in the press and say that because they can't say, yes, we understand that, and we get this, and yeah, okay, I do understand that. that because it's not a policy yet and it's not a thing and they can't get the money so until they you know better than me until they can get the money until they can get signed off and until everybody's ticked the box you don't announce policies or changes because it just doesn't happen and then you look even worse as a politician do you mean and people they don't work so they are listening it's whether they hear and they can react on it and it is down to us as an industry to present modeling that shows infrastructure of growth as opposed to just save us because we do need savings.

12:58In industry three are closing every single day. Three hospitality businesses are shutting every single day and it does need saving but it does need to be talked about as actually it's not about saving it's about reinvestment. What do you make of how business makes its argument generally? Where is the argument for business and for the growth that it provides? I think media has a lot to answer for for that because when you're asked to talk about certain things like this on media and you might go on to sky news or you might go on to question time or you might go on to i don't know news night or wherever else you're presenting and you have a you have a short period of time to try and explain what's going on and your instant explanation now it could be about our industry it could be about the construction industry it could be about the healthcare industry they will all say they're under pressure and it's a nightmare and it's not making any money and there's staffing problems and there's all of these so as you're trying to convey that message it comes across short sharp quick and it sounds like it's massively in trouble because you're not given the time but also if you're not in that industry if you're not in the construction industry after three minutes of somebody saying do you switch off do you go well I'm not a builder I'm not having anything built it doesn't matter if you're not you know what we need to do is have an understanding of how we get messaging across from every industry and the way that it works is quite often there's trade bodies that then lobby and push and then there's individuals nothing meets in the middle because for example if you are i don't know if you you drink in a pub you're you're one of the tradies right you wear a high-vis jacket you leave your house at 4 35 a.m you finish at four you're going for a pint in a local pub when you then switch on the news and you go home for a bit of tea and there is somebody from a trade body in a suit talking to somebody else about a politician.

14:48It just looks like another politician. It just looks like something, it's not relatable. Like you've gone to work all day, you've had your pint, you might have had burger and chips in the pub and you've gone, could that's more expensive than last time and the landlord's moaning again that he's not got any money, he's got to do 14 days straight and you go. And then you hear someone from a trade body, like that looks like a politician, talking to another politician or a TV presenter that's all dressed up in a suit. And it's just, it doesn't connect. It doesn't feel like it's one of us that's talking about it.

15:16So we have to be very careful about the way that we can structure it and talk about it because politicians and government listen to trade bodies and they listen because that messaging is driven and written out in a concise methodology. And there's the funding behind it to present modelling and structure so that politicians can understand. But actually what you need is the 50 odd million people in the country to understand why that business is under pressure, why barbers or hairdressers might be under pressure, why construction companies might be under pressure, why healthcare system, private nursing homes, or the care system, or why hospitality is under those pressures.

15:50For people to relate to that, you need to have people from that industry talking about it. And then the issue with that is quite often, if you're just the local landlords from around the corner, you're not media trained, you won't go onto television, or if they put you on television, you get nervous, you don't know what to say. So then it becomes this juxtaposition, and it ends up being people like myself, or like Angela Hartnett, or Will Beckett from Hawksville, or somebody else who has done and can talk and has an understanding of it. And it becomes just perhaps just a little more relatable.

16:22So we've got to try and convey those messages with an understanding that everybody can, the greater public can understand whilst trade bodies are still pushing underneath. The suit wearers can be talking to the other suits. Have you ever thought about politics? Yes. Yes, I have. Yeah, I have thought about it. But I'm not sure, one, I've got the time. Two, the route to becoming a politician. The worry about local politics, the worry about what day bin day is, and the worry about, you know, the potholes. I actually, I have thought about it. I thought, whilst all of that is completely irrelevant, that's not my day job.

17:08I don't need to worry or want to worry about that. So then I find myself in quite a fortunate position that I can say what I want. Because also, once you sign up to politics, you pretty much have to sign up to the... You have to toe the party line. You have to say the thing. Well, right now, I am criticizing the Labour government with the way that they are working with this industry. And I think it has more gravitas and more power for my industry. because as a Labour supporter, they can't go, oh, yeah, but he votes for reform. It doesn't really matter. He's always going to knock us. No, I'm not knocking.

17:41I think fundamentally what you do and some of the stuff that you have achieved, their comms are so bad. Some of the stuff you've achieved already has been fantastic. But actually, what's falling down here is an understanding of businesses and small businesses. And I will call them out. And I think if you go into the world of politics, I don't think you have as much power. I think you can try and change stuff. but I don't think you can change as much by being a mouthy bloke from the telly. Yeah, maybe, but I think it's, you know, there are more business leaders going in and, you know, you've had James Simpson go in and so on.

18:15I would much rather, what we lack in our industry, we lack a ministry of hospitality. There isn't the civil service for it. The hospitality is split over two different ministries and it gets, that's why it all gets confused. That's why there was the whole pork pie sausage roll thing during COVID. Because one thing was said in another and a different ministry was said in another thing. It just always says, it employs over three million people. There's another one and a half million people employed in the supply chain. It's four and a half million people are involved directly or indirectly in hospitality.

18:45That's a huge industry that brings so much money to the Treasury that does not have its own civil service ministry that advises irrespective of government. Now, that's a position where I could feel that people like myself, like Angela Hartnett, like Will Beckett, that we mentioned there, could work much better in terms of advising in a civil service perspective. So it's cross party. Whilst I vote Labour, hospitality is in the interest of everybody. And it is about getting that right. So and a civil service works irrespective of which party it is. It's advising on that space. a ministry of hospitality is something that i would be i would i would have a conversation of of advising or helping on if that was something that came in that's that is it's not it's not a frontline politician because i i also yeah i could go into the house of lords lord carriage of marlow well yeah yeah yeah it's got a certain ring to it um be interesting thoughts on like what's happened in the last couple of weeks, just as an observer.

19:53Part of the appeal of the Labour Party, which even I got as a former Tory, was majority, stability of government, et cetera. And it's just all kind of unraveled again. Yeah, it has. And I think there's a number of problems. I'm sure you've probably met Sakhir and I've met him a number of times and he is a genuine gentile and I think his ethics and everything is all in the right place he's a kind human and he's a good man and all of those things are wonderful traits and qualities but we live in an age where media is driven noise is driven shouty politics is all like and and he isn't into that diplomacy is something that he runs with you You know, the way, example, the conversations and the way that he's been able to deal with President Trump in a world where he goes bullying and smashing his way through everything else.

20:54We didn't get involved in that. So Kia went with the diplomacy behind the scenes stuff just to make it all OK, which works, which works in the world of politics behind the scenes. But we are in a world now where a we look at people look for showmen. I mean, people look for people that can have conversations, can stand there and feel that they represent. And I think what's happened is the moment that things have started to go wrong, I do think they've had a big problem with comms. Like in terms of like the things that they've been able to portray and they may haven't been able to defend themselves when they've come under attack.

21:27And I don't think they've been proactive about attacking the positives, which is something in this day and age, irrespective of where you think of whether it's right or wrong, it's something that has to happen. otherwise you lose votes and you've just seen in the locals that there's been a lot of votes that have moved and they've moved to a shouty party with very little in the way of policy that a lot of the people that have voted for them don't know what the policies are but they've voted for the guy that they think represents them because it's shouty and it's noisy and it's and you've got and there's even labour party supporters that have moved to there because it feels like it's a working class movement and the space that they've got, well, actually, they actually get us.

22:06Without looking at the bigger picture of what the policies are, because most people don't look at manifestos. People who vote don't read a manifesto. There might be some. We get our information about what people are going to do with our vote by the news. And when that comes out in the news, you go, oh, yeah, that's it. So you need soundbites. You need to be able to communicate in a way that's punching comes across. And I think, sadly, Sakhir and his team have not been able to do that and then when things have gone wrong when I think the Rachel Reeve thing was I don't think is a strong move I think she's not been able to convey what she wants to do in a in a positive manner I think the Mandelson thing was has been a real and absolute disaster for him where his soft approach to things which I don't know if you're a school teacher and if you're a parent all of that is great but you're not you're the prime minister and I think that's where every other party has been able to score points and put more division within the Labour Party, where they've now realised that you need a much stronger sounding representative that perhaps takes a lot more boxes for the general public.

23:19And I think that's where his issues have arisen. Fundamentally, I genuinely think he's a good human and a good man. I just think in the world of politics that doesn't always go all the way and once you brought up Andy Burnham earlier having talked about coming out and backing hospitality what do you sort of make of him I think Andy Burnham's great I've met Andy a number of times when we used to have a restaurant in Manchester I think what he's done for Manchester has been fantastic I think his ability to communicate is is really good I think in terms of his um his support for hospitality I mean he's already voiced it he's already seen it he already sees how Manchester which is a great I mean, it's a culturally rich and brilliant city.

23:59You could sense a town that was culturally rich and diverse, but not just that, it has student energy. It's got great sporting kind of prowess, but it also has an amazing food scene and all of those things combine. And that's being encouraged through growth. And that's what town should be about. When you see town planners drawing pictures of trying to rejuvenate city centres, it's always about, you know, here's a community space and here's food and his bars and his culture. And here's all of those things. Manchester and what Andy Burnham has been able to do there is kind of encase that and wrap that up and if you can take Manchester and make it the whole country that's what I'd love him to be able to do he's the sort of person that could stand at a prime minister's question time and argue back with the same veracity and force that perhaps Kemi or Nigel Farage do and can give back equally as well as opposed to just um dissecting an argument with statistics and figures and gently defending or avoiding can hit back well can hit back and i think that will come across in a much better way to many voters oh yes finally somebody who says it like it is he's got a northern regional accent regional accents are great there is that you can associate with a regional accents work uh so do you think you'd vote for him yes i would yeah the times article you gave an interview recently where you talked about how you made more money from being tom carriage than from restaurants and so on yeah well firstly you got to remember that's actually terrifying because if i hadn't been on television and i don't write books and i and i don't work with a with marks and spencers if those things don't exist i'm trying to operate off five businesses that don't make any money you know you like a lot of the decisions particularly last two or three years the way that things have been funded or supported comes through external work, comes through it.

25:50We make decisions. Well, I mean, we laugh about it with both my PA and managing director about gigs that I might have to be doing this weekend or where they send me or what they're doing, because it's a paid gig that comes in where an events team runs an event and then there's a fee associated with it. And that, it would sound like a lot of money if it was you and an individual, someone's going, here you go, there's some money for coming and doing stuff. He goes, but it doesn't, it's not like that. It just comes in and just disappears into, I mean, the managing director describes it. It's like, you know that Blackadder sketch where there's that one thing, that one episode where he was making money in Blackadder and it come in and he's going like that and it just disappears out the back.

26:26It's like it comes in through the front door and out the back and that back door goes straight into the business to try and support and help things grow. And that's our business. So every other hospitality business. It's quite similar to podcasting. Yeah. Yeah. But exactly. And you go, so I'm on this seven day week. movement of going around the businesses I would have been in by the end of today, I would have been in all five businesses and just made sure that they're all right, connected with everybody, made sure that everything is going on. But my world has grown from being a professional chef and winning two Michelin stars and being that person.

27:01Now I'm very fortunate that over that journey, I recognized when I appeared on Great British Menu and I cooked that there was another world out there that people were cooking and people were making television, that production, all of the people there, that was their job. They weren't just filming me cooking. There was a whole thing. So the realisation there that there was a whole new world to learn, I found quite exciting. And I was very fortunate that after that, the BBC asked if I would do a show. And I think I'm probably the last BBC chef to be employed that has been able to, because since then, there hasn't really been any new, no new chefs on the telly.

27:33Nadia came along and did something which was great after she won Bake Off. But after that, there's been very, very little. And it's the same faces. And I'm the last of the old same faces, you know, that come in and do stuff. Why is that? Well, I think that style of television has also changed. TV's changed. That's called a chop and chat television show where it's half an hour of you going somewhere in a kitchen cooking, showing somebody how to make it, you know, free courses. And then there's a book that's associated with it and everybody loves it. And everyone's at home and they buy that book for them or for their friends.

28:04And, you know, it's the recipe that you see on the telly. Viewing styles have changed. You know, people will watch on YouTube. They'll watch on ketchup. They'll watch on different models. you might watch one singular recipe in three minutes on your phone on Instagram. And all of that's changed. The way that people consume their cookery or cookery TV has changed. There is still the market space for people who joined me 10, 15 years ago on telly that have grown with us, that are still with us, that are still that audience, that still like that kind of television. But underneath it, it is definitely changing.

28:37And then the association that comes with it, the books and then the appearances and I work very, very hard to try and, and everything that I do is a hundred percent and you commit to everything and any gigs or anything that we do, we will make sure it is of the level of two stars at the hand. And so all of the, I am driven and is committed to making all of that work as much as the restaurant. So, so when you give that much care and soul, I, I think long-term it's all about a long game long-term. I think it comes back. I hope it does it when it does, you know, and Saturday I haven't opened the Hand of Flows 21 years later and in a very fortunate position um and then i think when you find yourself with that voice i think it's really important that you then use it for positive because there's hundreds of thousands of hospitality businesses out there they're just not giving the opportunity to do a podcast or do news night or do those things but how you with five high-end restaurants are struggling to make it work how's an independent gonna do it well that's it our costs are exactly the same as any other independent.

29:35They are the cost of the head chef, the manager, the food costs are the same. If everyone's paying minimum wage, that is exactly the same across the board. The numbers are about the same. There isn't anything that comes in any different. So your VAT is the same. Your business rates have gone up a percentage mark, pretty much the same. So all of those drop in. But that's exactly it. Independents aren't coping. They're not. And we operate as independents. I have five independents and they don't necessarily make money right now. They can make money. There have been times when they have made money.