Last orders? Bittersweet summer for pubs as rising costs out-shadow post-pandemic demand
Packed beer gardens herald the arrival of summer in Britain. For publicans, this summer presents a chance to rebuild after two years’ of Covid-19 restrictions battering trade.
Yet, with inflation surpassing 40-year highs and strike action threatening to severe revellers’ passages into city centres, will publicans be able to make up for those long, lost summers?
Pubs would cash in more than £4bn in sales in the June to August period before the pandemic, according to the British Beer and Pub Association (BBPA). This was the equivalent of almost 1bn pints and just over a quarter of the industry’s average annual sales.
The past couple of summers saw a myriad of restrictions on venues and Brits’ socialising rules, with regulations on space between tables, the size of bookings and contact tracing. In 2020, summer sales were just £2bn, around 526m pints.
Now, in Britain’s first summer fully free of Covid-19 measures, the sector is hopeful of a blockbuster trading period, especially with the return of mass sporting events and festivals.
A cocktail of threatened railway strike action, staff shortages and rising living costs all threaten to impinge a roaring return.
“Inflation is hitting a record high, customers are making choices about where they spend their money and we’re facing severe labour shortages, and as a result we’re in a situation where we need to be trading above average just to make a profit,” chief executive of the British Beer and Pub Association (BBPA) Emma McClarkin said.
COST OF LIVING FEARS
While Revolution Bars boss Rob Pitcher admitted the cost of living was “becoming a bigger and bigger issue” for consumers, previous recessionary periods had seen nights out emerge as an “affordable treat.”
“They might not buy a new car or TV, but the last thing you want to give up when times are tough is meeting your friends and bringing some joy into your lives,” Pitcher told City PM
Shepherd Neame boss Jonathan Neame said he was “reasonably optimistic” about the summer but the autumn was a “major concern”, with the energy price cap set to be hiked once again in October.
Punters across Shepherd Neame’s estate of 300 pubs had started to show signs of “some cautious spending” since April, however this was only to “a degree”, with spending “still encouraging.”
“Most companies will see some impact on margins because of their cost of inflation but equally, for people in hospitality, at least we have got a business,” he admitted.
The return of “consistency and normalcy” was paramount, Neame said, with pubgoers’ desire to socialise outweighing economic concerns.
Disruption at airports “might lead to quite a flurry of late staycation activity,” Neame also suggested.
“Summer is a very important period for pubs and entertainment venues, not just financially, but for a sense of national spirit too,” south-London pub owner Clement Ogbonnaya told CityA.M.
“With staffing at an alarming level, it will definitely make or break some businesses and management teams,” the Prince of Peckham publican warned.
With festivals and holidays abroad feasible again this summer, Ogbonnaya said he was “predicting a dip from the colder months (January to April), however a better summer than last year.”
STRIKE DISRUPTION
Train drivers across eight companies within the union Aslef have backed strike action across the country, in the first national strike since 1995.
For bars in city centres, railway strikes were a “real inconvenience” to recovering sales, Revolution Bars’ Pitcher told City PM
“We would urge all parties to come to an agreement as soon as they can,” he said. “The nation as a whole has been through a torrid couple of years and then the thought of a protracted rail strike is almost unthinkable when people just want to get back out there and start living their lives.”
The action comes as revellers have been making weekend-long trips to major cities around blockbuster music or sporting events, Pitcher said, with venues reaping the rewards.
CITY RECOVERY
“[Punters are] heading to Harry Styles or Ed Sheeran but then basing themselves in [a] city for the weekend, so we are seeing a good spillover with people exploring the city.”
Staff shortages and energy bill increases also threaten to strangle a successful summer, with one quarter of sites have been forced to close their doors for at least one of their usual trading days, according to the British Institute for Innkeeping.
Energy bills have shot up as much as 150 per cent for some licensees, the trade body added.
A wish-list to the future Prime Minister from the BBPA includes calls for sector cuts, a review of the alcohol duty system and extending the domestic energy price cap to small businesses.
“We are weathering a perfect storm, but we can’t hold on forever, we need relief as soon as possible before the cost of doing business forces venues to close for good,” the BBPA’s McClarkin said earlier this summer.
However, some landlords are already weighing up shutting shop. A barrage of cost hikes has left some 15 per cent of businesses feeling no longer viable, with those publicans planning to exit the sector shortly, the BII found.
Sadly, it seems the last orders bell may ring on landlords just at the very moment they might be able to see some light at the end of a two-year tunnel.