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BII chairman’s concerns for pub industry after this year's 'exceptional summer'

By Georgina Townshend contact

- Last updated on GMT

Profit warnings: Anthony Pender is concerned about rising costs at pubs when autumn arrives
Profit warnings: Anthony Pender is concerned about rising costs at pubs when autumn arrives

Related tags: Business rates, Taxation in the united kingdom

The chairman of the British Institute of Innkeeping (BII) has warned pubs of the potential “quick downturn” in sales after this year’s “exceptional summer” – which will show the full impact of rising costs within the trade.

Speaking to The Morning Advertiser​, Anthony Pender said like-for-like sales in the pub industry are up this year compared to others, mainly due to the good weather the UK has had in the past few months.

However, referring to the ALMR-Christie & Co Benchmarking Report​, he warned that in order for companies to “stand still in terms of profitably and sustainability” they have to maintain a 6% to 7% like-for-like growth.

“We are achieving 1% to 2% in bad weather, and are now, in effect, achieving around 6% to 7% because of the good weather.

“But, obviously the market needs to maintain 6% to 7%, which leads to concerns when we hit autumn, or when the good weather starts to close.”

When bad weather hits

Pender, also the co-founder of Yummy Pubs, said it will not be the initial hit of bad weather that will start to see companies suffer and “really put out profit warnings”, but when the VAT and business rates bills come out a quarter after.

“At the moment, the weather is playing into our hands and helping massively, but what we cannot allow – although operators will always evolve – is the local authorities, the Government or anyone else when it comes to these increases in taxes and costs, to believe that actually we are just adapting. That we are going to be the golden goose that pays the money and always seems to find a way around it.

“I do not think it's the case on this one.” 

Pender said it was a concern that the Government will see the good numbers coming from this summer, and will not look at things like weather patterns and trading results due to that, when considering business rate reforms.

“The Government will only start to look at business rates when unemployment starts rising and venues start closing. But that's too late,” he said.

“For Yummy Pubs I am not concerned, because we have pushed innovation and we are continuing to adapt our business model to survive. 

“But in my role at the BII, I know if you're a tenant and suddenly have to find £400 more a month for your business rates, they can't do that.”

Opportunities for some, loss for others

When the summer ends, Pender said he believes there will be a lot of movement in pub companies’ portfolios as they “jettison” the sites that are “weighing them down”, and a lot of consolidating.

This will create “opportunities for some, but obviously loss for others”, he said.

Pender advised smaller businesses to cash flow forecast now – while the weather is still good.

“They have to make sure they have got the money, and they need to budget properly,” he continued.

“And they have to do some real cost rationalisation. While the weather is good, go to tender, make sure you are buying at the right price, make sure you are negotiating hard, and that you are ready for that downturn.”

Make MPs aware

Pender also said operators needed to keep making MPs aware of the current situation pubs are in because trade bodies “can’t do it on their own”.

“I have not known a period in time where trade bodies have worked so closely together,” he said.

“We are at a pinnacle in terms of performance from trade bodies. They are working together, they are on message, and we are seeing sustained campaigns around business rates, which are coming from all angles. 

“The BII isn't a lobbying body, it's a training and professional body, but we still lend our voice to the business rates argument, because it's so important we support the trade bodies with our 10,000 members who are there for professional development.

“As operators, we have to put more pressure on. I went to see my local MP and talked to him about it. I know that various other operators have gone and spoke to MPs.

“The best way to deal with this is to talk to all our MPs and make them aware of it.

“They don't know, they don't understand. The MPs' scope of work is massive; they do not wake up and think about pubs as we do.

“You just have to keep on reminding them, and the trade bodies can't do that on their own.”

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