Pub Market Report: Rising costs depress pub profits

Pubs are struggling to convert sales growth into profit growth due to rising costs, according to the latest Pub Market Report survey from the PMA.

While 44% of licensees surveyed reported an increase in turnover in the previous 12 months, compared with nearly 32% reporting a decline, just 36% enjoyed an increase in profit and more than 40% actually suffered a decline.

The figures are exacerbated among tenants and lessees: 43% reported an increase in sales and 32% reported a decline, while just 30% increased their profit, and 45% saw profit fall.

The stagnant economy remains the biggest impediment to growth in the British pub sector, according to licensees, followed by supermarket alcohol pricing.

The economic climate was named by 44% of respondents as having the biggest negative impact on their turnover, while supermarket alcohol pricing was the biggest issue for 26%. The beer-duty escalator was third, cited by 12% of respondents, and the beer tie fourth (11%).

Among pub tenants and lessees, who made up 55% of the 353 survey respondents, the main factors were: the economic climate (47%); beer tie (20%); supermarket pricing (18%); and beer duty (9%).

For all respondents, the biggest cost increases were reported to be utilities (35%), drinks prices (27%) and business rates (13%).

Licensees are broadly positive about the year ahead, with 47% predicting a rise in turnover in the next 12 months, and only 19% anticipating a fall in trade.

■ The PMA’s Pub Market Report contains a full analysis of all the survey results, including licensees’ attitudes to food and drink, staffing and accommodation and entertainment, along with listings of the top 50 managed house operators, top 40 tenanted and leased pubcos and 300 independent multiple operators.

It is available from next week and can be pre-ordered now for £195. Contact us on 0800 652 6512 or go to http://tiny.cc/pubmarketreport to get hold of your copy