Brakspear boss: business rates rise threat hangs over the sector

By Gary Lloyd

- Last updated on GMT

Ever the optimist: Tom Davies says the Christmas period should help trade whereas summer was not so good
Ever the optimist: Tom Davies says the Christmas period should help trade whereas summer was not so good

Related tags Pubco + head office Multi-site pub operators Finance Government Property Legislation

Brakspear chief executive Tom Davies has described the threat of business rates rises and the current discount being axed in April next year as “the Sword of Damocles” hanging over the sector.

Davies, who took on the role of CEO at the Oxford-based pub operator in 2010, remains optimistic for the industry despite summer being a washout and hopes are now being pinned on a good Christmas trading period.

He tells The Morning Advertiser​: “The impending business rates rise next year is something that’s on everyone’s radar and it’s hugely worrying for the industry.

“We’ve kept our head above the water and I think we’ve done very well doing that but it feels like the Sword of Damocles is holding over us and we just need some clarity about where that’s going. Having said that, the turnover is OK but profitability is really tough.

“We’re serving more customers and people are still spending money but because of the increase in costs and the age-old thing of staffing plus inflation in food and drink and the premises cost of rates and energy means what’s falling through to the bottom line is not what it used to be.

“That bottom line profit is under a lot of pressure so we need to try to find profitability. We’ve got to be price-sensitive because our customers have got less money to spend in our businesses and we have to balance that against our needs of rising costs. So yeah, it’s tough.”

Disappointing summer

Davies also explains how summer affected trade at the business’s circa 125 pubs that stretch from as far west as Gloucestershire to Kent in the east.

“Trade is OK but the summer was disappointing,” he says. “June was great and then July and August were disappointing, clearly driven by the weather.

“The weather in September meant trade was fairly good but the impact isn’t as great when the sun comes out in July or August. It’s like having a brilliantly hot Monday. It’s better than an average Monday but it’s never going to be like having a hot Saturday.

“It’s never going to quite make up for July and August. Trade is holding up but what we’re finding in (managed pubs division) Honeycomb Houses is we’re serving more customers but the spend per head is down.

“They’re not spending quite as much money as they as they have been in the past. Maybe they’re cutting down on a course or maybe only having one drink.

“It’s hard work is the long and short of it but it’s not disastrous and we’ll just see how the next few months go.”

On the future, Davies is pleased energy bills are lower than they have been previously and says it will be interesting to see what happens this winter.

Staff more likely to stay

“The [staffing] challenges are also better than they than they have been,” he explains. “With talk of recession, people are potentially more ‘sticky’ in their roles. People are less inclined to jump around as they were perhaps 12 months ago. People are perhaps looking at it thinking, ‘I’m in a stable job with a good company’ and are more likely to stay rather than rush off to somewhere else that’s perhaps offering a little bit more money but in a more volatile environment.

“It's still tough but it has got better. I remain optimistic about hospitality and clearly I’m invested in it and love the sector and I always believe the pub is going to be somewhere people are always going to want to visit.

“It’s not getting any easier, that’s the message and without being able to fill the coffers from July and August, it is going to be a tough winter.

“We’re a robust business in a robust industry but it’s got some tough times ahead but we all love it and I think people will continue to love the pub and what it has to offer.

“We need to rise to those challenges and hope for hope for a great Christmas when, hopefully, people will come out and will want to celebrate.”

You can read a Big Interview with Brakspear chief executive Tom Davies​ on The Morning Advertiser​ website by clicking here​.

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