The COO of the Cornwall-based brewer and pubs operator stated: “Disposable income is down while the price of going out is up – that makes business particularly challenging at the moment. That dynamic is not helpful.
“In the south-west, it’s more acute. Visitor numbers coming here are the best part of 1m down since pre-pandemic and the population is only about 750,000 so it’s like the whole of Cornwall disappearing.”
However, he does see positivity in the form of staycation seekers as the warmer months are now beginning in the UK. He added the cost of going abroad and the safety fears coupled with that are “clearly on people’s minds” and hopes people opt for the south-west instead.
On the wider problem, Turner stated: “What’s the issue? Is hospitality fundamentally broken? The answer to me is no. People still want to go out, want to socialise, want to eat, want to drink, want to sleep so there is not a demand issue in the hospitality industry.
“The issue we have is the cost of doing it is high, particularly at a time when disposable income is under pressure. It’s high because there’s an unfair tax burden on our industry. The increasing levels of duty, the unfair rates regime in our industry that is propping up tech in supermarkets. If you look at VAT, we are one of the only countries in Europe now to not have a discounted VAT rate in hospitality.”
Big shock
He described the increase in national insurance contributions and the threshold at which it’s paid two years ago as a “big shock” and added: “It’s mainly down to Government decisions and tax reasons that the price of going out has gone up. I can’t see the Government changing the national insurance contributions decision and, therefore, we collectively need to get after a VAT reduction and obviously there’s a big movement and petition going on at the moment, led by Tom Kerridge. It’s great to see him putting his name and neck out there to do that and being supported by the industry. A 10% reduction in VAT would really help the dynamics.”
St Austell Brewery has increased its investment into craft beer producer Harbour Brewing Company, having took a minority stake in 2022.
He said the Harbour portfolio of brands can play a great role with its own range to make headway in the on and off-trade by providing consumers with a broader range.
He added: “We’re investing across the business but the realities are if the levels of profitability aren’t coming through because of the cost burden, businesses will make choices around how much they’re going to continue to invest. The simple equation is you can’t continue to invest at those same levels when you’re not getting the returns.”
St Austell Brewery is also continuing to invest in its pubs, according to Turner. He explained the Cornwall-based business has a “huge transformation plan” at its pubs and that has already been recognised via it winning a Publican Award last year as Best Managed Pub Operator (2-50 sites), “and that is down to the investment,” he said, “not just the capital investment, but investment into our people, into the experience, into the physical environment – we’re doing that in our pubs and in our brands.”
Still got a lot to do
“Our pubs have a huge potential. We’ve done a great job in the past few years of investing into the physical environment, making them much nicer places, investing into our team through capability, investing into food and investing into the overall guest experience.
“That’s the big change we’ve done and that’s culminated in the award at The Publican Awards. We’ve still got a lot to do so while we’re a good way through our estate of pubs, we’ve still got plenty to go at and continually evolve our offer there.
“With people’s disposable income under pressure, going out becomes more of a luxury treat so we have to deliver a first-class experience - whether that be the drinks range, the quality of food, quality of service and the experience. Delivering a great experience has never been more important. That doesn’t mean overcomplicating it.”
He added it was fantastic for the business to win a second honour of Best Sustainable Pub Company award at The Publican Awards too. He added: “It is and should be really important to all businesses to make sure you’ve got a business that cares about its environment and cares about the impact it has on the world. It’s important for employment and customers are choosing businesses that act in an ethical, sustainable way.
“It’s a big focus for us and we’ve got a fantastic young lady called Emily Coon who is our head of sustainability. We’re all probably still scratching the surface of this at the moment but we’ve made huge progress around food waste, renewable energy, water usage in our breweries, etc. We’ve got a very clear plan around our crafting a brighter future strategy and now we need to deliver on it.”
