BII report shows pub recovery undermined by rising costs & tax

The latest member insight report from the British Institute of Innkeeping (BII) highlights the fragile state of our nations’ pubs.

Their recovery is being undermined by the combination of summer trading below 2019 levels, rapidly escalating costs and increasing taxation.

The report showed that 84% of member’s pubs’ summer trading was below levels in 2019, with 54% trading below 75%.

The majority of the BII’s members, operating single pubs in every community 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 with taxation also rising as Government support falls away.

The impact of closure and severe restrictions over the last twelve months has left pubs with an average pandemic specific debt of over £50,000 which will now take over 4 years to pay back.

With 1 in 4 also having 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, 1 in 2 operators will not invest any money into their businesses in the next twelve months due to both lack of funds and levels of existing debt.

Pubs are facing a wall of rapidly escalating costs in all areas of their businesses;
> 76% are paying higher wages to attract and retain staff with 70% of these paying at least nearly three times the rate of inflation
> 2 in 3 pubs are seeing over 10% increases in food costs
> 1 in 3 pubs are seeing over 10% increases in drinks costs
> 1 in 2 have utility costs increasing over 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, leaving 72% of pubs running out of core lines in their food and drink offering.

Steven Alton, BII CEO commented, “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, 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.”