Pubs are Key for Growth and Levelling Up in Every Community says Report

A survey of British Institute of Innkeeping (BII) members, has highlighted the fragility of pubs in every community across the UK, as they face huge inflationary headwinds, disproportionate costs for their businesses, severe staff shortages and the impact of the cost-of-living crisis on consumers.

Our nations’ pubs represent a unique opportunity, bringing together significant economic contribution to the Treasury, supporting jobs and careers for people of all ages, whilst providing an essential and accessible hub at the heart of every community.

Impact on profitability

The survey revealed that over 75% of members are down on the revenues they saw in 2019, with 84% of those being down by more than 10%. 28% are down by more than 30% vs 2019.

In addition, 86% have reported that their profits are down vs the same period in 2019 and almost half of those were seeing profits down by more than 30%.

Their profits are being eaten away by the exceptional cost inflation they are facing across the board, with 66% saying their costs have increased more than 10%, 43% saying their costs have increased by more than 20% and 1 in 10 experiencing inflation of over 40% in the last 6 months.

Consumer confidence has also taken a massive hit, with changes in behaviour since the pandemic and their reduced disposable income as they themselves face hikes in the cost of living, which all further impact on the profitability of local pubs.

Staffing crisis

75% of pubs currently have vacancies in their businesses that they are struggling to fill. Of these, over half have more than 10% of their roles currently vacant and 1 in 8 have more than 20% vacancies.

The impact of this lack of staff means that 1 in 2 pubs are having to reduce their trading hours, and 1 in 4 are having to close their doors for 1 or more of their usual trading days, losing valuable revenue opportunities. All this, when they should be trading fully to make the most of the summer, ahead of the quieter autumn and winter periods.

Financial sustainability

A worrying 30% of respondents said they currently have no cash reserves in their business, with a further 50% only having between 1 – 3 months’ worth of cash reserves.

Furthermore, 70% have debts in their business, with over a third of those carrying debts of up to £30k, 40% having debts of up to £50k and a huge 1 in 4 pubs having debts of between £50k and over £100k. Without support, business failure will result in much of the repayment of Government backed debt will be lost.

When it comes to investing in the future of their businesses, nearly 90% are not currently seeking any additional finance and of those who were, 2/3 have not been successful in securing that finance through any route. 1 in 4 have used their own savings to invest but only 5% have been successful in securing finance through their existing bank and only 16% able to access funds through a new or additional bank.

Future trading

15% say that their business is no longer viable, and they will be leaving or selling their business shortly. Of these, over 1/3 have been in the trade for 10-20 years and over ¼ have been running pubs for more than 20 years, losing the wealth of knowledge, experience and commitment to the local community of these licensees and their families.

Priorities for Government Support

The following are the key areas for support that BII members have identified:
1. VAT reduction for hospitality businesses
2. Energy price rise cap for pubs
3. Full cancellation of business rates for 23/24
4. Draught beer and cider duty cut for pubs

Many of our members operating drink led venues, commented that a VAT cut had marginal benefit for their businesses and would want to see any cut extended to alcohol to ensure a level playing field with supermarkets and other retailers.

Steve Alton, CEO of the BII commented:
“Pubs are a vital and vibrant part of our unique heritage and national identity. They provide safe spaces for all, offering a diverse range of opportunities for people to come together; from breakfasts to business meetings, celebrations to community connections and everything in between – they are an essential and intrinsic part of British life.

“Hospitality is not a small subsection of our economy – pubs are everywhere in the UK, providing the opportunity for economic and social value in every village, town and city and can be the key to growth and unlocking the levelling up agenda across the nation.

“They also offer a vast range of employment and career opportunities to people from a wide range of backgrounds, education and demographics.

“With so many shops disappearing at a rapid rate from our high streets, they are essential for the regeneration of our communities and towns, but are currently under threat from the exceptionally tough trading conditions that they are battling.

“Government support is essential to enable us to create and develop economic, employment and social value growth in every community. There is no need for failure with the right support in place, but if Government do not step forward, they will have missed the opportunity to tackle so many of the issues we are facing as a nation, head on.

“Pubs have weathered the storm of Covid, by repurposing and diversifying their offer, creating safe, environments in every community, welcoming customers and teams from all walks of life and caring for those communities in the darkest of times.

“Without support from Government across the 4 key areas our members have identified, we will undo all of the good they do in bringing people together. Without support we will lose the opportunity for growth and regeneration, we will lose pubs from the heart of their communities, and we will lose something very special in our nations’ unique heritage and culture.

“They now need, and deserve, the support that can enable them to survive and thrive once more.”

14th July 2022

Pubs are key for growth and levelling up in every community, but Government support essential to their future survival

Dear Chancellor & Secretary of State,

Your recognition and support of our nations’ pubs both through the pandemic and moving forward with the publication of the Hospitality Strategy in July 2021, is greatly appreciated. Working actively with the BEIS team as part of the Hospitality Sector Council, several key recommendations have been co-developed to ensure the Hospitality sector can play its full part in the country’s economic recovery. The strategy recognises the essential community & social value our pubs and their teams provide in addition to their significant economic and employment contribution. The role we play in every community across the country will be pivotal to delivering the regeneration and levelling up plans of Government.

Our 10,000 individual members who independently operate pubs in every high street, village, town and city across the country remain fully committed to the communities that they serve. They provide safe, accessible and inclusive spaces for all to come together. As an essential economic hub, they also provide vital local skilled jobs and careers whilst supporting local suppliers and brewers, who make pubs unique as part of our national heritage. Very simply, our members are fearful of their ability to sustain their businesses in the current exceptional trading environment, which will prevent them from being the economic growth engine in the communities they have served.

The trading and financial realities are stark, as borne out in our latest member survey completed this week;

The survey revealed that over 75% of members are down on the revenues they saw in 2019, with 84% of those being down by more than 10%. 28% are down by more than 30% vs 2019.

In addition, 86% have reported that their profits are down vs the same period in 2019 and almost half of those were seeing profits down by more than 30%.

Their profits are being eaten away by the exceptional cost inflation they are facing across the board, with 66% saying their costs have increased more than 10%, 43% saying their costs have increased by more than 20% and 1 in 10 experiencing inflation of over 40% in the last 6 months.

75% of pubs currently have vacancies in their businesses that they are struggling to fill. Of these, over half have more than 10% of their roles currently vacant and 1 in 8 have more than 20% vacancies.

The impact of this lack of staff means that 1 in 2 pubs are having to reduce their trading hours, and 1 in 4 are having to close their doors for 1 or more of their usual trading days, losing valuable revenue opportunities. All this, when they should be trading fully to make the most of the summer, ahead of the quieter autumn and winter periods.

A worrying 30% of respondents said they currently have no cash reserves in their business, with a further 50% only having between 1 – 3 months’ worth of cash reserves.

Furthermore, 70% have debts in their business, with over a third of those carrying debts of up to £30k, 40% having debts of up to £50k and a huge 1 in 4 pubs having debts of between £50k and over £100k. Without support, business failure will result in much of this Government backed debt being written off.

15% say that their business is no longer viable and they will be leaving or selling their business shortly. Of these, over 1/3 have been in the trade for 10-20 years and over 1 in 4 have been running pubs for more than 20 years, losing the wealth of knowledge, experience and commitment to the local community of these licensees and their families.

Our members have been consistent in the areas of investment required to sustain their businesses in the short term and to provide the platform on which they rebuild and grow once again;

  1. VAT reduction for hospitality businesses
  2. An energy price rise cap for pubs, protecting pubs with many incorporating accommodation
  3. Full cancellation of business rates for 23/24, ahead of full reform and rebalancing with the digital economy
  4. A significant draught beer and cider duty cut for pubs, 20% reduction for a minimum container size of 20 litres

Government investment is essential to enable us to create and develop economic, employment and social value growth in every community. There is no need for failure with the right support in place, without it the opportunity will be missed to tackle so many of the issues we are facing as a nation.

Pubs have shown incredible determination and adaptability by repurposing and diversifying their offer, creating safe, environments in every community, welcoming customers from all walks of life, and caring for those communities in the darkest of times.

Without support we will undo all of the good they do in bringing people together. Without support we will lose the opportunity for growth and regeneration, we will lose pubs from the heart of their communities, and we will lose something very special in our nations’ unique heritage and culture.

They now need, and deserve, the support that can enable them to survive and thrive once more.

As always, we would welcome any further engagement with you and your officials to ensure the investment proposals above are implemented to the benefit of the individual businesses, the wider economy and society as a whole, who value the key role our pubs play in every community.

Yours sincerely,

Steve Alton
Chief Executive Officer
British Institute of Innkeeping (BII)