Casual Dining

National living wage 'could be positive for pubs'

By Nicholas Robinson contact

- Last updated on GMT

Sustainable Restaurant Association managing director, Mark Linehan: "This industry is the hardest one to make money in, I think."
Sustainable Restaurant Association managing director, Mark Linehan: "This industry is the hardest one to make money in, I think."
Pubs can thrive under the national living wage (NLW) when it comes into force on 1 April, two operators have said, despite dire warnings from other trade leaders who say otherwise.

The claims follow the launch of the Publican’s Morning Advertiser​’s online survey into the effect of the NLW​ on pub businesses across the country today (25 February).

What’s in a wage?

  • Staff aged 25 and over will have to be paid the NLW of £7.20/hour
  • The London living wage will be £9/hour
  • By 2020, the NLW will have to raise to £9/hour

Past headlines about the industry's response to the enforcement of the NLW (see box on right) hadn't shown the sector in a good light, said managing director of the Sustainable Restaurant Association Mark Linehan.

"Last year, there were two headlines [in the mainstream media] in terms of our sector and how we pay our staff [so little] that didn't reflect well on the trade," he said.

One headline was about the lack of transparency about tipping and the second was how the sector had reacted to NLW, Linehan told delegates this week at the Casual Dining show in London's British Design Centre.

"This is a sector built on trade margins and it's competitive and costs have to be managed," he said.

Two sides of the coin

"On the other hand, in my organisation we always hear about how it is difficult to recruit staff and young people don't see it [hospitality] as a career choice and those two sides of the coin are intrinsically linked."

Owner of Gallivant restaurant in East Sussex, Harry Cragoe, had started to pay his staff the London living wage of £9/hour six months ago and abolished tipping.

"This industry is the hardest one to make money in I think – it's also long hours and stressful," he said. "We want to put smiles on customers' faces and you need a happy team to do that."

Paying a workforce a decent living wage would make them happy and would have a positive impact on the business, Cragoe added.

"If you have a happy team delivering great customer service and products, that will make more happy customers and they will go out and tell their friends, and we should be better off as a result."

The impact of paying employees the London living wage and giving them monthly and quarterly performance-based bonuses hadn't affected the restaurant's bottom line too much in the first quarter it was implemented, he claimed.

To counter the rise in wages, the price of food and drink had to rise, but Cragoe said this was countered by the higher quality service and the fact that the finished products were of a higher standard too.

Valued their positions more

He claimed it was evident that staff, as a result of being paid more, valued their positions more and would perhaps consider sticking around to forge a career.

Staff being more enthusiastic about building careers in the sector was a big positive, said Oakman Inns finance director Joseph Evans.

Oakman Inns was one of the first companies to agree with the Government's NLW, claimed Evans, who added: "Yes, there's a cost, but well-treated staff will give a good service to the customers.

"We are fighting for talented staff and against people choosing to eat at home – one of our biggest points of difference is attentive and caring teams."

However, Association of Licensed Multiple Retailers chief executive Kate Nicholls warned that the NLW could counter the continued growth of the trade because it would increase staffing costs.

"Everybody has an aspiration to pay fair wages, but the implications we found was that the effects would be the same as removing 10% of the operating margin," Nicholls said.

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