Pubs face inflationary costs of over 10 per cent as bosses call for tax relief
Pubs are facing inflationary business costs of more than 10 per cent as publicans battle spiralling energy and labour costs.
More than two in three pubs told an industry survey they were facing such substantial cost increases.
Venues are facing skyrocketing energy bills while a labour crunch has seen wages of bartenders and chefs leap in the wake of the pandemic and Brexit.
In a survey of the British Institute of Innkeeping’s members, more than one in three publicans said they currently have no cash reserves in their businesses.
Three quarters of respondents said their overall revenues were more than 20 per cent down in 2021 vs 2019. Half of the publicans surveyed said revenue was down more than 40 per cent.
City Pub Group boss Clive Watson told CityA.M. that his pub chain had been hit with an 80 per cent increase to its energy bill at the end of last year, when a previous contract expired.
The pub operator said significant increases to energy costs would have a “material impact on operating margin.”
Steven Alton, BII CEO said: “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.”
Hospitality bosses have called on the Treasury to freeze the VAT rate at 12.5 per cent instead of returning it to 20 per cent this spring.
Publicans are also due to be hit with hiked National Insurance employer contributions from April.
There have been calls for the Treasury to extend support measures for households battling with rising energy costs to small businesses.
Federation of Small Businesses (FSB) national chair Mike Cherry said many small businesses “face many of the same challenges as consumers in the energy market, but without the same protections.”
He added: “The household rebate should be matched by an equivalent business rates rebate, to help the smallest firms which have been weathering these price increases for months already, and which desperately need a measure of protection from the energy crisis storm.”
Operators were also dealt a blow on Thursday after the Bank of England hiked rates, which will increase repayments on some personal and professional debt.
The FSB’s Mike Cherry said this would “add to existing cashflow woes just as tax rises loom.”
In the BII’s survey, 55 per cent of respondents said they still had debts of more than £40k per pub.