What went wrong for Sheffield's ghost cafe?

On the corner of Castlegate and Blonk Street, above where the Sheaf and Porter flow into the Don, is one of Sheffield's most picturesque cafes.

Housed in an old public toilet (it's a Sheffield thing) perched precariously over the river, it features two open-air terraces, panoramic floor-to-ceiling windows overlooking the Grey to Green site and a hand illustrated logo on the door.

The interior is full of tastefully mismatched furniture, incongruously placed chandeliers and, of course, the mandatory local colloquialisms printed on the walls – in this case, 'YER MARDY BUM' and 'WATSAMARRAWIDEE?'

There's only one thing wrong with it. It never opened.

According to a 2019 news report the 2 Rivers cafe and bar was set for a "late summer opening" that year, after the council had completed work on the Grey to Green II project that turned dreary Castlegate into a car-free haven of cycle lanes and wildflowers.

RMC Media reported at the time that the building had been bought five years before by Red Sky Inns, who also owned the Riverside Café in Hillsborough and the Wentworth House Hotel near the arena (both still open). Companies House shows that Red Sky Inns is an active company, filing accounts as recently as February.

The Grey to Green project was completed on time, but that was quickly overshadowed by a bigger threat. The now-inactive Facebook page for the 2 Rivers makes it clear that they were clobbered by the pandemic, which forced independent businesses across the country to shut their doors for months at a time.

"Well we’ve finished along with the fabulous new pedestrianised surrounding areas... Then along comes tier 3" reads one of their last social media posts, from 24 October 2020. "One day we’ll finally get the doors open."

But they never did.

What's so strange about the 2 Rivers, especially compared to other stalled projects, is that it looks immaculate. Anyone can peer through the windows, and you'd be forgiven for thinking it was already open. It's as though the customers had to leave at short notice, Pripyat-style, and never came back.

The venue's last interaction on social media was in a Facebook comment dated 21 June 2021 – exactly two years ago. Here they informed an enquirer that "we are currently getting our other outlets out off hibernation and once we have confidence that social distancing won’t return , we’ll look to finally getting this one moving."

Now Then contacted the 2 Rivers, but has yet to receive a response.

The fate of the 2 Rivers is an unusually visible example of a trend that has affected thousands of small businesses across the country since the start of the first lockdown in March 2020.

The number of business insolvencies increased by 30% in 2022, a year which saw 22,109 firms go bust – a 13-year high. This figure doesn't include thousands of small businesses who decided to shut up shop before being declared insolvent.

The seamless transition from the pandemic to the current cost-of-living crisis has hit the hospitality industry especially hard. One survey in October 2022 found that 35% of industry businesses expected to go bust or be operating at a loss by the end of that year.

The UK's antiquated and often unfair system of business rates is also a factor in why Sheffield has so many empty units. Acting as the commercial equivalent of Council Tax, the system sees businesses with physical premises pay a tax rate supposedly based on the value of the property.

But properties are only re-valued every five years, and many in the sector think some long empty sites have been over-valued, making it impossible for local businesses to take them on.

In 2019, before the pandemic, James O'Hara (who co-owns Great Gatsby and Picture House Social) said that after converting a disused public toilet into the cocktail bar Public, the business rate on the property was increased seven-fold. He told the BBC there was a "complete lack of consistency" in the way rates are set across the city.

This perfect storm of circumstances has led to a number of Sheffield businesses and branches going under in recent years, including the Devonshire Cat, the Kelham Island Brewery (since saved by O'Hara) and, of course, John Lewis and Debenhams. Some of the city's highest profile sites, including the Old Town Hall and the Salvation Army Citadel, laid empty for decades.

It's unknown whether the 2 Rivers will ever open its doors, despite its interior being completely finished. It could eventually be opened by Red Sky Inns, or they may choose to sell the building to another company who may be in a better position to make a go of it.

There are also promising signs of a recovery in the area. At the other end of Castlegate, work has started in the last few weeks on refurbishing the notorious Tap and Barrel pub, which closed in 2016. It's set to be reopened by the same people behind Peddler Market, and will feature a terrace looking out over the river. Work is also due to start on regenerating the Castle site itself in the coming months.

But success stories like Peddler are exceptions to the rule in Sheffield. It's difficult to see much changing for the hundreds of empty units across the city without the government reforming the way hospitality venues are taxed, and without citizens having more disposable income to spend on a night out.

With households spending less on going out as a result of the current crisis, Sheffield's ghost cafe looks set to haunt Castlegate for a little longer.