Opinion

Pubs’ recovery under threat as supply chain issues escalate

By Steve Alton, chief executive, British Institute of Innkeeping

- Last updated on GMT

Threats on rise: British Institute of Innkeeping's Steve Alton
Threats on rise: British Institute of Innkeeping's Steve Alton

Related tags: Food, Beer, Licensing, Technology, Cellar, Finance

Our sector relies upon an effective integrated supply chain linking raw materials, manufacturing and logistics to ensure our pubs can deliver a fantastic experience for their customers.

Not only is this supply chain being disrupted through access to raw materials and labour at all stages, but now these scarce resources are being chased by multiple sectors leading to escalating costs and availability. This all comes at a time when pubs are only just starting their recovery.

While stronger in recent months, our recent member insight survey showed that 84% of our members’ pubs’ overall summer trading was below 2019 levels with 54% trading at less than 75%. With escalating costs now hitting pubs, there is a real concern on cash flow and, ultimately, their very survival. 

No reserves for second year

In any ‘normal’ year, the summer months provide an opportunity to build reserves for the quieter winter months ahead and this has not happened for the second year in a row. 

The majority of our members also expect to trade no better than breaking even over the next few months. With the average pub now having more than £50,000 of pandemic-specific debt and an expectation of over four years to pay it back, these viable businesses are fragile and will need support.

The supply chain issues are generating multiple challenges for our members. Some 72% have run out of core lines in their food and drink offering, leading to extensive menu changes and 66% have also seen significant price increases. One in four have seen that the lack of choice for customers has led directly to reduced levels of trade.

Increases in costs

Cost rises are impacting the majority of pubs with two out of three seeing over 10% increases in food costs and one in three seeing over 10% increases in drinks costs.

In addition, 47% are having difficulties getting drinks supplies to meet customer demand and 27% do not have enough food supplies.

These supply chain issues, while significant in their own right, come at a time when four out of five pubs have vacancies, 75% of pubs are having to increase wages (many at over double the rate of inflation) to attract and retain staff, 33% of pubs are experiencing no-shows and 25% are having late cancellations.

We have written to the chancellor ahead of the Autumn Budget to ask for the support that our viable pubs will need as they navigate the challenges ahead and to allow them to be at the heart of the nation’s economic recovery.

Related topics: Rebuilding the Pub Sector

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