Writing for the Daily Mail, Greene King chief financial officer Jonathan Fearn said the UK’s pub sector was approaching a tipping point after years of rising labour, energy and property costs, despite government moves to reduce business rates for the industry.
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Fewer young workers
Fearn revealed that Greene King now employs 20% fewer 16 to 20-year-olds than it did in 2023, highlighting hospitality’s shrinking capacity to provide entry-level employment opportunities.
“As a result, we now employ 20% fewer 16-20-year-olds than in 2023 because the same opportunities have just not been there,” he said. “With more than a million young people not in education, employment or training, this is particularly painful for an industry that has traditionally provided that vital first step into work.”
The pub operator welcomed the Government’s planned 20% business rates discount for pubs from April next year but argued the measure falls far short of addressing wider cost pressures.
“The reality is this relief, estimated to save £1,100 per pub, pales in comparison to the scale of other cost pressures and will almost certainly be cancelled out by wage inflation,” Fearn said.
Budget asks
Greene King is urging the Government to extend the rates relief to pubs of all sizes, freeze alcohol duty and avoid raising machine games duty, warning that further tax increases would quickly erode any benefits from business rates support.
The company also reiterated its backing for a reduction in hospitality VAT from 20% to 10%, aligning the UK with lower rates seen in several European markets.
According to Fearn, inflation has added more than £400m to Greene King’s cost base since 2019. Over the same period, hourly pay has increased by more than 60%, utilities costs have risen by over 50%, and business rates now cost the operator around £60m annually across its estate of 1,500 managed pubs.
To illustrate the challenge facing operators, he pointed to industry estimates showing pubs retain just 12p of profit per pint sold, despite the average pint now costing more than £5.
“It truly does feel like a punishing cocktail of costs when looking at keeping a pub profitable,” Fearn wrote, citing higher employers’ national insurance contributions, labour cost inflation, business rates and beer duty.
He also warned that support promised by ministers has yet to materialise in a meaningful way.
“At the time of the business rates announcement, the Prime Minister said this was a first step and ‘the cavalry is coming’ to help pubs,” Fearn said. “If the Prime Minister is really committed to growth and supporting business, the cavalry must arrive at the Budget, before any more pubs have to shut their doors for good.”
The intervention comes amid increasing concern across the hospitality sector over the cumulative impact of tax, wage and regulatory changes. Fearn argued that without action, operators will be forced to prioritise survival over growth.
“Our industry is uniquely suited to the Government’s aim of creating jobs and driving growth in every postcode,” he said. “But unless we see cuts to the costs that are crippling our sector, pubs’ focus is taken away from serving their communities and instead, by necessity, their focus is simply on survival.”
- This story was originally published on the Morning Advertiser’s sister site, MCA, here.
