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Pub businesses say energy costs pose biggest threat to profitability

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The British Institute of Innkeeping (BII) has written to the Secretary of State for BEIS and the Chancellor highlighting the “devastating impact of the energy crisis” on its members running independent pub businesses, calling for the Government to act now and provide essential support for the sector.

The group claims that licensees across the UK are dealing with a “lethal cocktail of inflationary costs, staff shortages and squeezing of consumer confidence”, all while trying to navigate the challenges for the industry resulting from the Covid pandemic.

In a recent survey of members, the BII revealed that rising energy costs topped the list of factors impacting the profitability of their pub businesses, but within weeks of the survey, the organisation said that the crisis has escalated even further.

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Unlike the increases in energy bills for members of the public, there is currently no cap in place for businesses, and many BII members are regularly reporting increases of 300% or more on their existing payments.

Independent pub operators will need to trade at least 20% higher than pre-pandemic levels to just break even, claims the BII, but 3-in-4 are still trading below 2019 levels, with 86% reporting lower profits from that already reduced revenue.

In addition, many are still repaying Government Bounce Back loans and other pandemic specific debts at an average of around £40,000 per pub.

Steve Alton, CEO of the BII, said: “Our members have been working tirelessly to maintain pubs as accessible and affordable safe spaces for all, at the heart of their communities across the UK, absorbing as much of the inflationary costs placed on their businesses as possible. We have seen a sharp rise in calls to our helplines, with members uncertain of how to navigate the challenges facing them, the majority of whom are seeing unsustainable cost increases across every area of their businesses, but rising energy bills are the top concern at the moment.

“Even at the height of summer, the busiest time of year for pubs, licensees are now seriously considering the sustainability of their businesses, as the astronomical rising cost of business is undermining any recovery they may have already made. To be clear, the huge impact of rising energy bills alone will be enough to destroy many of these much loved and needed small businesses, providing vital social connection for so many.

“The crisis now facing our members is just as damaging as the impact of the pandemic. Without support, the rise in energy bills and further cost increases will cripple these viable businesses, risking lost jobs and careers, Government loans being written off, and the loss of essential, accessible places that connect us all in our communities.

“We have called on Government for urgent short-term support to allow these vital businesses, supporting local jobs and livelihoods in every community, to weather these exceptional costs of doing business. They now urgently need immediate support with energy bills via grants and a cap on future increases, alongside a waiver of business rates for 23/24 as well as a more meaningful cut to the differential rate of duty on beer applied to smaller container sizes. Alongside these measures, there need to be measures in place to stimulate consumer spending, all of which will allow them time to start their recovery.

“Pubs are an essential component of growth, regeneration and levelling up across the UK and without support, their contribution to skilled jobs, local investment and supporting local suppliers will be lost, in many cases, forever.”

The group is calling on the Government to act urgently to ensure the survival of pubs across the country.

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Tags : British Institute of Innkeepingpubs
Joshua Walton

The author Joshua Walton

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