The Real Reason Behind the Closure of Pep’s Restaurant – Rachel Reeves’ Tough Budget Takes the Blame

Pep Guardiola's restaurant is closing down, a casualty of Labour Chancellor Rachel Reeves’ tough budget and tax policies.

Tast Catala, located on a stylish Manchester street, was frequently used by the Spanish manager to host new Manchester City signings and the club’s executive board.

Friends Pep Guardiola and renowned chef Paco Perez served traditional Catalan dishes at the restaurant.

Premier League stars and managers, including Mikel Arteta and Kevin De Bruyne, visited to enjoy dishes such as squid ink rice priced at £43.

Pep and top chef Paco Pérez opened the venue seven years ago to bring a taste of their native Catalonia to Manchester.

However, a statement on its website on Tuesday announced that Tast will close this Saturday, citing “exceptionally challenging trading conditions and increased costs.”

Labour Chancellor Ms. Reeves has faced criticism for placing the burden of business rate reforms on restaurants and pubs.

UKHospitality reports that venues will face an average increase of 76% in business rates, raising concerns that hundreds more establishments could shut down.

Soaring labor and operating costs, rising energy bills, supply chain issues, and reduced consumer spending are also severely impacting the sector.

Allen Simpson of UKHospitality stated last night: “This is yet another example of how cost pressures are forcing venues to make the difficult decision to close permanently.”

“Successive budgets have significantly increased employment costs and will soon drive business rates even higher. Unfortunately, this will only accelerate business closures and job losses.”

“The Government must take action. It should increase the business rates discount for hospitality to the maximum of 20p to avoid substantial rate hikes in April.”

Shadow Business Secretary Andrew Griffith commented: “The Chancellor’s latest budget was another own goal for pubs and restaurants.”

“They were already struggling with higher wage costs, and her hikes in business rates seem to have sealed their fate.”

Tory MP Alan Mak added: “Conservatives reduced business rates for restaurants to help them through the pandemic and beyond.”

“Labour’s removal of our business rates support is disgraceful and is damaging our hospitality sector and high streets.”

In Reeves’ impactful budget on November 26, it was announced that the National Living Wage will increase by 50p per hour to £12.71 starting April 2026, equivalent to an extra £900 per year for a full-time worker.

The minimum wage for 18–20-year-olds will rise by 85p to £10.85 per hour, a higher-than-expected increase, as the government aims to phase out the lower pay band and move toward a single adult rate.

Apprentices and those aged 16–17 will see their hourly pay increase by 55p to £8.

Guests included Manchester City’s star striker Erling Haaland, pictured here with the head chef.

Arsenal manager Mikel Arteta with Guardiola at the upscale eatery.

Ms. Reeves stated that the wage increase would help address the cost of living. However, UKHospitality warned that the added costs would likely be passed on to customers through higher prices.

The trade body noted that these changes would cost the sector an additional £1.4 billion and discourage businesses from hiring younger workers.

In addition, all alcohol duty rates will rise in line with Retail Price Index inflation at 3.66% starting in February.

The Wine and Spirits Trade Association stated that this would result in duty increases of 11p on a bottle of Prosecco, 13p on red wine, and 38p on gin.

In a further setback, there was no reduction in the 20% hospitality VAT rate or employer’s National Insurance contributions, measures the industry had called for to alleviate the burden on businesses.

A spokesperson for the British Beer and Pub Association said: “We believe constructive dialogue between publicans and MPs is key to driving change.”

"We need more MPs visiting their local pubs and championing them. We do not endorse barring Labour MPs from pubs."

“We recognize the strong sentiments this budget has sparked, which is why the BBPA is calling for an urgent, pub-specific solution.”

The Treasury has highlighted £4.3 billion in support available to help reduce costs.

This week, more than 250 pubs joined the “Taxed Out” campaign, banning Labour MPs from their premises in protest against the business rate and VAT hikes.

Landlords participating include Sun columnist Jeremy Clarkson and pop star Rick Astley.

The new tax system could lead to bills increasing by up to £6,000.

The British Beer and Pub Association reports that 2,000 pubs have closed in the past five years, and the new business rates could push the industry to the brink.

Pep’s restaurant on King Street could seat 120 guests across three floors, featuring a casual dining and bar area on the ground floor, a first-floor dining room, and a second floor with private rooms offering a tasting menu.

The former Barcelona manager partnered with fellow Spaniards—Manchester City CEO Ferran Soriano and former director of football Txiki Begiristain—to invest in the venture in 2018.

World-renowned chef Pérez was brought in to oversee the restaurant, which was launched by the Fazenda restaurant group.

Pérez holds five Michelin stars across three of his restaurants.

He was born in Huelva, southern Spain, but grew up in Catalonia, surrounded by quality food at his parents’ tapas bar.

The Tast Catala statement posted on Tuesday read: “Like many in the hospitality sector, we have faced exceptionally challenging trading conditions and increased costs.”

“But the unwavering support of our shareholders and the dedication of our team have seen us through these past seven years.”

“Above all, we are proud to have been able to share a piece of Catalonia, our beloved region, with the people of Manchester.”

“Between now and our final service on December 20, we look forward to welcoming you and celebrating what Tast has always represented: great food, great people, and memorable moments.”

In an update yesterday, the venue announced that unredeemed vouchers will be automatically refunded.

One customer responded: “It was a lovely restaurant. The staff were always so friendly and attentive, and the food was consistently good. But with King Street prices, it’s a tough time for high-end hospitality.”

Another added: “It’s a sign of the times, I’m afraid. Seven years is actually quite long for a restaurant. Only 50% last over five years, and just 17% survive beyond a year.”