Pubs and breweries will face major financial losses, make no profit and many will be forced to shut up shop if the energy bill relief scheme is not extended for them beyond 31st March 2023, new research has shown. In a new report by Frontier Economics, produced for the British Beer and Pub Association, calculations showed energy bills returning to their regular rate post-March would put pubs and brewers at a loss of 20% on average. The report showed energy costs were currently the biggest threat to their viability, and would be even more lethal when the relief scheme ended in April. This was on top of cost inflation across other parts of their businesses food and drink, to key commodities and wages were contributing to profit margins being erased. Based on an extensive analysis of industry reports, accounts and interviews with pub operators and brewers as well as a full review of the wider economic context from August to October 2022, the report noted how businesses had already made changes to mitigate against cost inflation where possible; from changing menu options to reducing opening hours. It flagged that energy costs were still hitting businesses hard and rises post-March simply could not be guarded against and would be crippling. In addition to illustrating the immense pressures facing the brewing and pub industry, the report – produced in advance of the Autumn Statement – lays out different routes for intervention from Government to save businesses from closure, from extending the energy support package to reform of the business rates system. Tim Black, Associate Director in Frontier Economics’ retail and consumer team said: “Recent economic shocks of Covid, Brexit and the war in Ukraine have put sustained pressure on businesses. Our analysis shows the pub & brewery sector is facing a combination of surging costs – primarily energy, but also raw materials and wages – and falling demand, as consumers reduce their spending in the face of severe cost of living pressures. While there are different impacts across businesses and uncertainty on the outlook, the underlying economics of the sector makes absorbing these shocks incredibly difficult – and some firms will struggle to survive.” Aside from the report, individual pubs and breweries across the country have also reported cases of poor practice and profiteering by energy suppliers in recent months. Some suppliers have sought to make money outside the restriction of the cap through increasing prices on other parts of bills or cancelling contracts at short notice, in some cases businesses have struggled to find suppliers because they have been deemed to be ‘too vulnerable’ as businesses. Gemma Gardener who runs The York Hotel, a pub with rooms in Morecambe: “Not only have our energy bills extortionate, but our supplier has also added on extra unexpected charges outside of our standard rates as well, from a £2k installation fee to doubling our daily hire charge unexpectedly. “We have tried to switch suppliers but been rejected, and the only reason we’re able to keep going is because our pub company is helping us through. We’re struggling with our bills but so are our customers as well and so we’re being squeezed at both ends. We’ve even started offering free food to encourage customers to come in and buy drinks. “Not knowing what we’ll be charged month on month is incredibly scary, this isn’t only our business but our home as well but we’re at the mercy of our energy suppliers. If it’s this bad now I dread to think what it will be like when the energy relief scheme ends come April.” Emma McClarkin, Chief Executive of the British Beer and Pub Association said: “A long-term guarantee that energy costs and contracts will be fair and reasonable come the Spring cannot come soon enough for our pubs and brewers. They are planning now for the months ahead and need assurance that bills won’t rocket and completely wipe out profits. “This report demonstrates the unique position our sector finds itself in, vulnerable to cost inflation across the entirety of its supply chain and acutely conscious of declining consumer confidence and wanting to avoid increasing prices for struggling customers. It shows how we have tried to remain resilient but that there are simply no further means for brewers and publicans to absorb costs. “We are urging the Government to take seriously consider the impact rocketing energy costs will have not just on the businesses that have to pay them, but the communities they are embedded in and serve across the entirety of the UK. These figures paint a stark, very grim picture of what is to come if our sector does not make the cut for extra support come the 1st of April.” Read the full report
Football fans have been heading to the pub to cheer on their favourite team with beer sales receiving a boost and 15million pints expected to be drank on Sunday when England face Senegal in the knockout stages; 5 million more than usual, delivering an additional £22 million to the industry. Ahead of the tournament, a survey conducted by the British Beer and Pub Association showed pubs expected the World Cup to boost business by up to 10%. However, mid-week games have delivered more than expected in some cases, with England’s first group game against Iran packing out pubs on a usually quiet day, with a 62% uplift in beer sales according to data consultancy CGA Insight, the equivalent of 3 million more pints worth almost £12million. Now, as England head into their first knockout game of the tournament this Sunday, pubs across the country will be holding their breath and hoping for a win to help celebrations continue over the coming weeks. Emma McClarkin, Chief Executive of the British Beer and Pub Association said: “Pubs were hoping for a boost to business during this World Cup and so far, the beer has been flowing, and fans have been showing up to cheer on England. The tournament has been filling up pubs on days that otherwise might be quieter, and we’re hoping that trend continues in the next couple of weeks. “It’s been a tough year for our industry, and we know people are feeling the pinch but we’re really hoping fans continue to turn out to support two great British institutions by toasting to the Three Lions at their local pub. We’ll be keeping everything crossed this Sunday because when England do well, so do our pubs!”
With just two weeks to go until the first planned December rail strike the British Beer and Pub Association, British Institute of Innkeeping, Night Time Industries Association, Mayor of the West Midlands Andy Street and the Association of Town and City Management have today (29 November 2022) written an open letter to the negotiating parties in the rail dispute stressing the urgent need for a resolution. Regarding the letter and the ongoing disputes Emma McClarkin, Chief Executive of the British Beer and Pub Association said: “The weeks leading up to Christmas are the busiest of the year for pubs, and they were looking forward to trading normally for the first time in three years, but news of these strikes have dealt a serious blow in an already critically difficult economic climate. Every day we go without a resolution is another day of damage to the industry, with cancellations being made and Christmas parties called off. "Our industry desperately needs a boost this Christmas and so we are urging all parties to find an urgent resolution to rescue this festive season from ruin for our pubs.” Read the letter
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