Rising costs hurting small pub businesses

15-Apr-2024 - Last updated on 15-Apr-2024 at 13:56 GMT

Licensees: publicans Chris Walsh and Beccy Keddie are dealing with extra costs

Improving trade but ever-escalating bills is an issue several pubs are experiencing three years after sites were allowed to start serving again after the pandemic forced the on-trade to close its doors.

The forced closure of pubs and the hospitality sector saw individual sites lose out on an average £40,000 in earnings while closed between 20 March 2020 and 12 April 2021, according to small business insurance provider Simply Business’s research.

Of course, trading restarted as outdoors only, but other findings from the survey included almost two-thirds (63%) of small business owners say that rising taxes, interest rates and inflation are eating into profit margins while the British Beer & Pub Association reported 1,000 pubs have closed since 2021, at a rate of 500 closures per year.

Among those affected are Beccy Keddie, operator of the Swan with Two Nicks, Bedford, who said: “It’s definitely not been easy. We still aren’t back to pre-Covid earnings. It feels like people don’t have the same appetite for going out since lockdown. I can understand that – given the current pressures – but we love to welcome our customers and provide a place for them to socialise. We’re doing everything we can to make our pub a cost-efficient option but we have to balance our books by introducing some cost increases.

“On average our bills are between £2,000 and £2,500 a month. For a small village pub that is unbelievably high, but there isn’t any way we can reduce this. Business is generally great, but with all the increased outgoings – brewery bills especially – on top of VAT, I do think we will find the coming months difficult.

“Running a pub doesn’t feel the same but we are hopeful for the future of the business and we want to see more people come to enjoy spending time in our gorgeous village pub.”

Meanwhile, Dan Brown, owner of Yupp Beer in Newark-on-Trent, Nottinghamshire, which operates the Fox & Crown, said: “In general, things are going well but we operate in a very different way now.

Not enough support

“This venue closed down during Covid and only reopened just over a year ago. Sales are certainly harder to come by than they were before lockdown but we are definitely heading in the right direction. It feels like the suburbs have been much slower to recover than the city centres.

“We’re not seeing nearly enough support from the Government. Until they can offer enough relief for pubs or reduce the offers to supermarkets, the habits of drinking at home rather than pubs, which was formed during lockdown, will continue to exist in much higher numbers than they ever did before.

“Overall, we have a good business that is trading at expected levels. We are seeing a regular, gradual increase in sales, so are forecasting a decent 2024.”

Chris Walsh, publican at the Bricklayer’s Arms in Putney, south-west London, explained he signed the lease on the pub in June 2020 when it was essentially a building site and it was a huge challenge to finish the work while the sector experienced dips in and out of lockdowns along with a lack of income.

“We started doing takeaway beers to raise funds to finish the works and managed to finally open the doors three years ago in time for the reopening of pubs across the UK,” Walsh said.

“Things really took off from then on out. I was lucky enough to have the support of great family, friends, and of course the team within the business. The business is in good shape, and we’re popular with the locals, which we’re delighted about.

“A persistent problem over the past three years has been the rising costs of almost everything. We’re trying to give customers value for money, pay staff a fair wage and keep the business afloat.

Pubs were hit

“We are a 100% independent family-owned business with no big pub company or brewery behind us, so the margins can be really tight.

“The Government could help pubs by considering a reduction on beer duty. We have such a rich history of beer and pub culture in this country, but we have one of the highest beer duties in Europe.

“Making it easier for small business owners to keep the cost to our customers down will help to encourage more people to visit their local.”

Simply Business UK COO Bea Montoya added: “Back in 2021, our research showed pubs had lost an average of £40,000 each as a result of the pandemic restrictions yet many remained optimistic about their recovery and their future.

“Following an often confusing phased return to business, our favourite pubs were hit with a cost-of-living crisis, rapidly rising interest and inflation rates, an unprecedented rise in the cost of energy and declining consumer spending as people chose their living room over their local.

“The effect of these challenges can’t be understated and small businesses are the lifeblood of our local communities, and with over 5m of them in the UK.

“We would encourage people to sample the variety and originality that only an independent business can offer – and we know our publicans would be delighted to welcome them.”