15% of pubs say business no longer viable

By Amelie Maurice-Jones

- Last updated on GMT

Government help: BII survey sheds light on a struggling sector (Getty/ Vladimir Vladimirov)
Government help: BII survey sheds light on a struggling sector (Getty/ Vladimir Vladimirov)

Related tags Finance Bii

The British Institute of Innkeeping (BII) has called for Government support to ensure the future survival of pubs, after a survey of its members revealed the fragility of the sector as it battles huge economic challenges.

The BII urged Government to implement VAT reduction for hospitality businesses, an energy price rise cap for pubs, full cancellation of business rates for 2023 and 2024 and draught beer and cider duty cuts for pubs.

This would help protect the “vital and vibrant part” of Britain’s unique heritage and national identity, according to BII chief executive Steve Alton.

The survey revealed more than three quarters (75%) of members were down on the revenues they saw in 2019, with 84% of those being down more than 10%. What’s more, almost three in 10 (28%) were down by more than 30% versus 2019.

In addition, 86% have reported their profits are down compared to the same period in 2019 and almost half of those were seeing profits down by more than 30%.

Profits are also taken a hit due to inflation, with 66% saying costs had increased by more than 10%, with 43% claiming costs had risen by more than 30%. One in 10 also claimed to have experienced inflation of more than 40% in the last six months.

In addition, 15% said their business is no longer viable, and they will be leaving or selling it shortly. Of these, more than one third had been in the trade for 10 to 20 years, and more than a quarter have been running pubs for 20 years plus.

Gov support needed

Alton said: “Government support is essential to enable us to create and develop economic, employment and social value growth in every community.

“There is no need for failure with the right support in place, but if Government do not step forward, they will have missed the opportunity to tackle so many of the issues we are facing as a nation, head on.

“Pubs have weathered the storm of Covid, by repurposing and diversifying their offer, creating safe, environments in every community, welcoming customers and teams from all walks of life and caring for those communities in the darkest of times.”

He said without Government support in the areas identified by the BII, the opportunity for growth and regeneration would be lost, and pubs would be lost from the heart of their communities.

“They now need, and deserve, the support that can enable them to survive and thrive once more,” he added.

The staffing shortage facing the industry was also apparent in the survey. Three quarters (75%) of pubs currently had vacancies in their business they were struggling to fill. Of these, more than half have more than 10% of their roles currently vacant, and one in eight have more than 20% vacancies.

The impact of this is that one in two pubs are having to reduce their trading hours, with one in four having to close their doors for one or more of their usual trading days, losing valuable revenue opportunities.

Economic challenges

Some 30% of respondents also said they currently had no cash reserves in their business, with half only having between one to three months’ worth of cash reserves.

Furthermore, 70% had debts in their business, with more than a third of those carrying debts of up to £30k, 40% having debts of up to £50k and one in four pubs having debts of between £50k and £100k.

Alton said: “Hospitality is not a small subsection of our economy – pubs are everywhere in the UK, providing the opportunity for economic and social value in every village, town and city and can be the key to growth and unlocking the levelling up agenda across the nation.

“They also offer a vast range of employment and career opportunities to people from a wide range of backgrounds, education and demographics.

“With so many shops disappearing at a rapid rate from our high streets, they are essential for the regeneration of our communities and towns, but are currently under threat from the exceptionally tough trading conditions that they are battling.”

When it comes to investing in the future of their business, nearly 90% are not currently seeking any additional finance, and of those who were, two thirds have not been successful in securing that finance through any route.

What’s more, one in four have used their own savings to invest, but only 5% have been successful in securing finance through their existing back, and only 16% were able to access funds through a new or additional bank.

Related topics Rebuilding the Pub Sector

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