Pubs face 'toughest year for over a decade'

By Georgina Townshend contact

- Last updated on GMT

Take the strain: pub sector warned 2018 will be the toughest in a decade
Take the strain: pub sector warned 2018 will be the toughest in a decade
The pub industry should treat recent figures released on Britain's managed pub sales with "very cautious optimism", says the managing director of procurement firm Regency Purchasing Group (RPG), and warns the sector faces "its toughest year in a decade".

New levels of taxation, continuing pressures around minimum wage, the exchange rate, insurance premium tax, rising food costs and the continuing uncertainty around Brexit are all contributing to "extremely challenging times" for pubs and restaurants, says the firm.

Staffing issues are also an ongoing problem for a sector, it said, which takes 43% of its workforce from abroad. With a weak pound making wages less attractive, plus a Brexit-fuelled perception of being unwelcome, the number of EU immigrants to the UK fell by 54,000 in the year to June 2017.

Despite statistics recently released by the Coffer Peach Business Tracker that suggested Britain’s managed pub and restaurant chains saw collective like-for-like sales come out slightly ahead in January 2018​ compared to 2017, Alex Demetriou, managing director of RPG, believes: "[This year] will be the toughest year the industry has ever seen for over a decade."

Demetriou warned the figures should give rise to "very cautious optimism, at best", and said: "It continues to be an extremely difficult time for pubs and restaurants overall.

"While like-for-like sales may be slightly ahead, the issue is the net profit.

"It is the increasing costs such as minimum wage, pension contribution, tax on cooking wine, etc., that is putting these businesses under pressure. The Government is either unaware of the challenges or it is choosing to ignore them."

Short-term respite

Demetriou continued: “The Chancellor’s decision to freeze beer duty and extend the £1,000 business rate relief for most pubs in England in last November’s Budget provided some short-term respite, but does little to provide any long-term support to publicans and restaurateurs.

“We support the Campaign for Real Ale's campaign for a long-term freeze on beer duty, and for the business rate relief to not only be made permanent, but increased to £5,000 a year.

“The hospitality industry is the fourth biggest employer in the UK, so it makes a significant contribution to the nation’s economy, and more should be done to support the industry.”

The first few months of 2018 have already seen a significant number of closures in the casual-dining sector​, with the likes of Prezzo, Strada and Jamie’s Italian each shutting one third of their restaurants in a bid to streamline the business and balance the books.

Regency works with more than 2,700 leisure businesses throughout the UK, including some of Britain’s biggest and best-known attractions, hundreds of golf clubs, plus pubs, hotels, zoos, farm attractions and many others.

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