A new member insight report from the British Institute of Innkeeping (BII) is highlighting the fragile state of our nations’ pubs.
It says their recovery is being undermined by a combination of summer trading below 2019 levels, rapidly escalating costs, and increasing taxation. Eighty-four per cent of member’s pubs’ summer trading was below levels in 2019, with 54% trading below 75%.
The majority of the BII’s members, operating pubs in communities across the UK, will at best be breaking even, moving forward. Revenues remain below 2019 levels, the cost of food and drink is rapidly escalating, wages are having to be significantly increased to attract and retain staff, and taxation is also rising as government support falls away.
The impact of closure and severe restrictions over the last 12 months has left pubs with an average pandemic specific debt of more than £50,000, which will take over four years to pay back. One in four have insufficient funds to keep up with outgoing costs. The fragility of these small, independently-run businesses will significantly undermine their ability to be at the heart of the economic recovery.
Already, one in two operators will not invest any money into their businesses in the next 12 months due to both lack of funds and levels of existing debt.
Escalating costs
- 76% are paying higher wages to attract and retain staff, with 70% of these paying at least nearly three times the rate of inflation
- Two in three pubs are seeing more than 10% increases in food costs
- One in three pubs are seeing over 10% increases in drinks costs
- One in two have utility costs increasing by more than 10%
Operational challenges are also significant, with 61% not being able to recruit enough staff to keep up with their workload, 33% experiencing no-shows and supply issues, and 72% of pubs running out of core lines in their food and drink offering.
‘A very real danger of widespread business failure’
Steve Alton, chief executive of the BII, said: “The government has now formally recognised the significant economic, employment, and social value of our members’ pubs with the recent launch of the Hospitality Strategy. This insight from our membership clearly shows that further investment will be required by government to safeguard the future of our nations’ pubs and enable them to be at the heart of the economic recovery.
“Our members will need trading support over the coming months and years in three key areas: a full business rates holiday for England, alongside a fundamental reform of the rates system, an extension of a reduced rate of VAT for our sector, and a rapid introduction of a duty cut for draught products served in pubs, to both support them and the local brewers that are dependent upon them.
“If government do not recognise the support that is desperately needed by our fragile small businesses in the coming weeks and months, there is a very real danger of widespread business failure in our sector.
“I have this afternoon written to the chancellor and the secretary of state for BEIS [business, energy, and indsutrial strategy], highlighting not only the stark realities for our members, but also the immediate need for these three key areas of ongoing support to be urgently addressed.”
