Pub Market Report: Sales grow; profits flatline

By Noli Dinkovski

- Last updated on GMT

Related tags: Cost

Half of licensees surveyed reported an increase in turnover last year
Half of licensees surveyed reported an increase in turnover last year
Last year’s good summer helped boost pub sales, but increases to business running costs continue to hold back profit growth, the Publican’s Morning Advertiser’s annual Pub Market Report survey has found.

While half of licensees surveyed reported an increase in turnover last year, only 37% said that profits had increased. In contrast, 35% of licensees said profits had fallen, against 28% reporting a drop in turnover.

Of the pubs with improved turnover, 31% cited the weather as having had the biggest impact on trade in the past 12 months, up a massive 25 percentage points on the year before. The other main factors were pub investment (23%) and an improved food offer (22%).

And while the economic climate continued to matter — cited as the most important factor by four in 10 of those pubs reporting a drop in sales — 44% of all pubs said their biggest cost increases over the past year have come from utility bills, up 10 percentage points on 2012.

Pub running costs

Increases to business running costs are also giving licensees plenty to think about in 2014. On a scale of one to five (one being ‘very little concern’, five being ‘of major concern’) respondents scored increasing business costs at 4.3, compared to 3.9 for beer price hikes and 3.8 for the economic climate.

More optimistically, 53% of licensees believed turnover would go up this year, while just 15% predicted it would fall. Attitudes to business rates have also improved, with 13% claiming to get ‘a good deal’ (up from 8% in 2012). Meanwhile, 39% said they were ‘far too excessive’, down from 53% in 2012.

The survey also revealed a growing trend for pubs to provide food more often, with 21% now offering food all day (excluding breakfast) — up from 17% in 2012.

Vibrancy

The Association of Licensed Multiple Retailers (ALMR) said the survey findings were consistent with its own annual benchmarking report, published last August.

Kate Nicholls, strategic affairs director at the ALMR, explained: “Sales are up, fuelling investment in many local communities and signalling a more confident and more vibrant sector.

“But while the survey suggests we are well placed for steady growth, it also makes clear that the sector remains volatile and highly responsive to external factors — not just the weather, but also regulatory and economic change.”

Nicholls added: “Growth is coming at the expense of margins and the cushion operators have to absorb cost increases remains stretched. It is clear that unsustainable costs are the biggest potential brake on future growth and we hope government, regulators and suppliers take note.”

The British Beer & Pub Association said it had found similar cause for positivity in its work with members. A spokesperson said: “There are certainly positives here with greater stability and grounds for optimism in the sector.”

Related topics: Other operators

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