LONDON — The imminent hike in British business rates could force many food retailers in the capital to shut down or relocate, according to retail giant Pret A Manger.
“It may direct us to relocate into certain areas, or come off some of the main thoroughfares,” said Pret’s chief financial officer Adam Jones at the Retail Week Live conference on Thursday.
“Ultimately, it does fundamentally shift the lease economics for a lot of our shops in central London,” he said.
“For our competitors — that may not do quite as high volumes as Pret — we think it would actually make a lot of units in London no longer viable.”
Business rates are similar the commercial version of income tax, and are levied on retailers including shops, cafes, and hotels.
The rate changes, which come into effect in April, are the first re-evaluation of business rates for seven years, and could see up to 500,000 British firms face increases of up to 300% when they are introduced.
Many businesses expect to see a fall in rates, but around a third — mainly those in the south east of England — will see rates go up, with 21% anticipating an overnight increase of more than 40%.
Jones said that Pret stores were not necessarily facing closure, but said that the firm was unlikely to renew or extend leases in more affluent areas of the capital, where hikes will be the sharpest.
“There are certain parts of London — let’s say Mayfair — where food and beverage economics no longer work,” he said.
Asked whether he saw that impact spreading to other parts of central London like Oxford Street, Jones said:
“Definitely. You will see some real fallout from this particular tax.”
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