The British Institute of Innkeeping (BII) has today released the results of its most recent member survey, detailing the continued devastating impact of the pandemic on pubs.
The survey reveals pub operators facing huge cost increases, crippling debt and fading cash reserves, leaving the future of our nations’ pubs hanging in the balance without ongoing Government support.
Christmas impact
The survey saw members reporting huge losses in trade over the Christmas period, with various restrictions in place across the UK, and consumer confidence plummeting due to the rise in the Omicron variant.
73% of respondents reported their revenue over the festive period was down by over 20%. Of those, 1 in 2 were over 40% down in comparison to the same period in 2019.
72% of respondents were more than 20% down on profit, but 2 in 3 were over 40% down in profit for the same period in 2019.
2021 as a whole
With the continued disruption of lock downs and strangling restrictions at various points in 2021, it was inevitable that 75% of respondents saw overall revenues being more than 20% down, with 1 in 2 of those down by over 40%, meaning the vast majority were loss making for the whole year.
Business fragility
Trading whilst facing heavy restrictions over the course of the last 2 years, has left members’ businesses in a fragile state, and has severely restricted their ability to weather further challenges, such as inflation, staff shortages and supply chain issues.
Over 1 in 3 respondents to the survey currently have no cash reserves in their business, and of those that have some cash reserves left, 1 in 2 only have up to 2 months left before the coffers are empty.
Inflation
Current inflation in the UK is 5.4%, and 93% of pubs are suffering levels of inflation significantly above this national rate. Of those, more than 2 in 3 are facing inflationary business costs of more than 10%.
These huge inflationary costs they are currently facing are hampering their ability to start their recovery. Many operators are concerned about passing too many costs on to consumers, who are themselves feeling the pinch of steep rises in the cost of living. This vicious cycle further exasperates inflation, dampening trade levels and endangering these often small, family run businesses.
Debt
In addition, our pubs face ongoing repayments for pandemic specific debt. Even following months’ worth of repayments already made, 55% of respondents still have debts of over £40k per pub, to repay going forward.
Priorities for support
The survey also shows the top 3 priorities for BII members as they face the future for their businesses. Firstly, a continued VAT rate reduction to enable them to trade out of this crisis. This includes an extension of the discount to alcoholic drinks served in our nations’ drinks led pubs, who have seen minimal benefit from the existing discount, and are often supporting vital social connection at the heart of their communities.
Secondly, business rate suspension is key to supporting their recovery, with 1 in 4 needing at least 6 months suspension and a further 1 in 2 needing a full year to enable them to recover and rebuild their businesses.
Finally, a meaningful draught duty cut that directly benefits pubs is also needed to support our overly tax-burdened licensees, and 5% in a year’s time is simply not enough to make the difference they need to see immediately. 90% of respondents believe the draught duty discount should be at least 10%, of those, 2 in 3 need to see it being over 20% to have any real impact on their businesses.
Two in 3 members also say that the duty cut must also be applied to smaller containers than the current 40l measure. Of those, 1 in 3 need this to apply to container sizes of 20l to enable them to give choice to their local communities.
Recovery & rebuilding
The survey also revealed some stark realities for pub operators, with 1 in 2 saying they will only continue to trade subject to further Government support.
One in 10 licensees already believe their business is unviable and will cease trading shortly.
Of those 1 in 10, 43% have been licensees for over 10 years, with 1 in 3 having been in the trade for over 20 years. Losing the experience and knowledge of these vital operators from their communities is a devastating prospect.
CEO Steven Alton commented, “Essential interim support will need to be delivered at the upcoming budget, to enable our members to meaningfully start their recovery, whilst they tackle the strategic challenges of resourcing, inflation and rebuilding long term sustainable levels of trade.
“The BII are calling on the Government, as the Chancellor reviews the budget ahead of the new financial year, to safeguard these small, essential businesses, supporting local suppliers and brewers, at the heart of their communities.
“This support will both safeguard pubs in every community across the UK and enable their role as an essential component of rebuilding communities and high streets, levelling up across the UK.”