A recent snap poll conducted by The Morning Advertiser (MA) found operators were overwhelming lacking in confidence when asked about the future of their business.
More than three-quarters (76%) of the 119 survey respondents said they were not confident about the future of their business while just 24% felt more assured.
However, owner of Cheshire Cat Pubs and bars, which recently won Best Drinks Offer at the Publican Awards, Tim Bird, urged as the sector faces “a lot of change” over the next year, operators must remain “positive” and “focused on growing sales”.
“As an industry we are having to get used to a new living wage, increasing rents in some quarters, increasing costs generally and of course a general election, which will bring times of uncertainty.
“But we have to remain positive. We have great people working with us and great pubs and we cannot be distracted from doing what we do best, which is giving our guests a wonderful experience every time they visit.
“We must try to be confident and show this outwardly to our people and our guests. If you believe it, you will achieve it”, he continued.
Unprecedented challenges
In addition, Bird said negativity within the industry, teamed with cost pressures across the board, were having the biggest effect on the sector and urged operators to maintain a “heads down and crack on” mentality.
He added: “Operators have faced unprecedented challenges since 2016; Brexit, Covid, recruitment crisis, the war in Ukraine, energy costs, big brewer’s annual increases, a perilous rise in the living wage, inflation rises, rent costs plus a big upward shift in mortgage rates and fuel prices.
“We have shown amazing strength and resolve battling through all these challenges, but we have to keep riding it out. Better times will come.
“If everyone continues to talk doom and gloom, they will get exactly that. It’s time for a major shift in the outlook and to get positive about this amazing industry.
“Our people and our customers are depending on us! Put them first and involve them in the challenges. A problem shared is a problem halved.”
However, with further changes on the horizon, including further increases to wages and business rates, owner of the Unruly Pig, in Bromeswell, Suffolk, Brendan Padfield, said the jury was “still out and deliberating” as to what the next 12 months hold for hospitality.
The Top 50 Gastopub operator added food inflation and the cost-of-living crisis had already created an “unenviable” combination for pubs.
"I am slightly more confident about the economy than I have been for a long time. There are some green shoots out there”
Nonetheless, looking forward, Padfield also said there were “positive signs to focus upon”.
“The average customer has had two cuts in their national insurance contributions in their pay packet and is also now facing reduced energy costs.
“In addition, the mortgage market has stabilised and a base rate interest rate cut by the Bank of England seems feasible in the coming months for the first time in years.
“The UK is not likely to achieve stellar growth in the foreseeable future, but the country may well have dodged the bullet of full-blown recession.
“Overall, I am therefore slightly more confident about the economy than I have been for a long time. There are some green shoots out there”, he continued.
When it comes to market trends, Colliers head of alternative markets James Storehouse told The MA there had been “polarisation at the upper end” of the sector, with premium offerings looking “robust”.
Though he added there was “more uncertainty” at the value end of the market as economic headwinds continue to put “pressure on discretionary spend” for consumers while the cost of doing business was still compressing operator’s margins.
Heavy burden
On top of this, the sector’s recovery from Covid has been “tampered” due to ongoing economic challenges, Storehouse added.
“Energy costs, inflation and so forth seem to be easing, but there is also a wage inflation issue, which continues to add pressure.
“And then on a slightly wider basis, from a transactional and financing perspective, there is concern over the cost and availability of debt for operators who are looking to make new acquisitions or to refinance existing facilities.
“Revenue, in a lot of cases sales, is holding up pretty well. If you look at the figures that people have been reporting, generally sales are up and doing well, but converting that into profit is the challenge because of the increased cost of operating”, he explained.
To boost confidence within the sector, Storehouse urged pubs need to see a “root and branch” reform to business rates to tackle to “unduly heavy burden” on hospitality firms.
He said: “[Most operators] are comfortable with regulatory and licensing aspects [of business], but the impact that Government can have from a taxation perspective, particularly with business rates, there is a lot of talk about that.”
