Sector battling 'vicious inflationary circle'

According to the NTIA, imposing double-digit duty increase to spirits and other categories would decimate already struggling independent clubs, pubs, bars, and restaurants across the UK.

Based on its members trading figures, the NTIA stated the projected impact of alcohol duty without a retail price increase would reduce the operating liquor margin by more than 5% on top of trade already being down 15% on average vs 2019 and operating costs rising in excess of 30%, putting thousands of SMEs at risk.

NTIA CEO Michael Kill said: “If the Government wants us to be part of the great resurgence and growth, they have to give us a stable platform to grow and the financial headroom to survive.

“The current financial footing is untenable for many businesses, the energy relief subsidy is confusing and unworkable with many energy companies capitalizing on the scheme, and businesses still paying extortionate energy costs, with most independent businesses living hand to mouth.

“We need the Government to extend business rates relief, restructure the energy subsidy as a clear cap on energy costs and cut VAT across the board.

“The Golden quarter is rapidly approaching, and without further support in the coming budget, we will see thousands of hospitality and night time economy businesses and jobs lost in the coming months.”

Further kick in the teeth 

Furthermore, Electric Star Pubs founder and owner Rob Star said the sector had been “hit from every angle” in the last 12 months and the business had seen drinks costs steadily rise since the start of the year, with some suppliers increasing prices multiple times.

Star also said there was a “limit” as to how much of these price increases could be passed onto the customer and explained energy prices had added to the “vicious inflationary circle”.

He added: “When we renewed our energy deals in June / July, we faced increases of more than 200% and that figure doubled again in August.

“We are desperately trying to keep up with the constantly increasing London Living wage, although due to other cost pressures we are now tracking slightly behind.

“The effect of these increases on our suppliers, leads to everyone else having to increase their prices from bar supplies to cleaners and security in a vicious inflationary circle.

“There was some light in a very dark tunnel with the freeze on duty, which would have kept yet another price increase at bay. The news a few days ago it had been scrapped, was a further kick in the teeth for an already battered and bruised industry.

“How many more companies need to throw the towel in, before our Government realizes they are pushing all of us over a very high cliff with nothing to break our fall.”

Diminished profit margins 

Echoing the calls for the duty freeze to be reconsidered before prices rise even higher was Stee Yard CFO Zoe Andrews, who said the increasing cost of inflation had already “diminished tight profit margins”.

Additionally, Wales-based Creative HQ CEO Bruno Nunes, claimed the company could no longer pursue its growth plans due to lack of clarity and instability from the Government, stating the sector needed to see “action” from the country’s leaders.

He said: “At the end of 2021, we had a 3-year growth plan that would bring about the doubling of our teams and the nearly tripling of our revenue showing a really strong bottom-line conversion in the process and more importantly, introducing some really exciting circular economy projects.

“Since July, we’ve come to realise we can no longer pursue our growth plans as intended and whilst we appreciate the international challenges, the instability from todays’ Government is compounding the issue, both with the lack of clarity about the action they will take but also from the challenges and impact inflation, energy costs and consumer confidence is having on our balance sheets.”

Moreover, Eden Group, which is based in Scotland, owner Michelle Armstrong said the business, which employs 96 staff and additional sub-contractors across 4 units, would close without “immediate action” on soaring energy costs, VAT and alcohol duty and interest rates.

She added: “Independent operators like us have little to no chance in a market already dominated by multinationals monopolizing on these dark days, probably in the knowledge they will survive the storm then reap a long-term control of pricing. 

“With bills rising by up to 400%, the industry will be decimated without a pandemic-style response as the cost-of-living crisis is here and assistance is needed to protect business and jobs.”