The survey from the British Institute of Innkeeping (BII) found despite positive trading over the summer, high costs has hampered profitability with just one in four making a clear profit.
BII CEO Steve Alton said: “The appetite of the public to visit our fantastic pubs has clearly returned to pre-pandemic levels for many of our members but they continue to face a raft of cost challenges, having to boost trade significantly just to stand still.
“Despite these challenges, many tenacious operators have managed to increase or maintain their trading revenue, by working hard to develop their offers to attract customers new and old to their pubs, also putting on events and festivals and fundraising for local causes, giving people many reasons to visit their pub.”
Positive impacts from major sporting events have been countered by another lacklustre summer alongside high energy, staffing and food and drink costs are impacting operators’ ability to thrive, according to the BII.
“There is a great love of the great British pub but few consumers know their local carries a disproportionately larger tax burden than other small businesses and in most cases than that, of much larger companies,” Alton added.
“£1 in every £3 they take over the bar goes back to the Treasury in tax – from the food and drink they sell, the people they employ and the properties they occupy in their communities.
“This is all before they pay rent or mortgage payments, wages for their teams or for themselves. A busy pub does not always equal a profitable one in this unfair landscape.”
Unpalatable price rises
The BII boss highlighted the ongoing challenge of rising costs across the board operators and the impact it is having on business.
“To avoid passing on unpalatable price rises to consumers facing their own cost-of-living crisis, in many cases, they have had to reduce opening times to save on energy and staffing costs and even reduce their team sizes,” Alton said.
“We recognise the 75% relief on business rates for pubs in England has been a lifesaver for many operators.
“It must be noted one in four of our members are either in a rural area or are small businesses that don’t pay rates.
“With increases to the minimum wage of 40% since 2019 and high inflation in food, drinks and energy, their margins have been continuously eroded and with no support in real terms, they are now in a perilous position.”
He went on to reiterate concerns about the recent reports the Government is considering a ban on smoking in outside areas including pub gardens.
The BII’s survey showed while 7% of respondents said there would be little or no impact to them if the ban came into force, with some not having outside areas to manage, almost two thirds (62%) said it would significantly impact their trade.
A further fifth (20%) said it would result in the closure of their pub. These results were similar to The Morning Advertiser’s recent poll, which showed 85% of operators would not support the ban.
Unnecessary restrictions
Alton added: “At a time when members are seeking reduce restrictions, legislation and cost of doing business, it is unwelcome the Government is considering unnecessary restrictions such as banning smoking in pub gardens – our members have indicated for one in five, this could lead to business failure and for the vast majority, there would be a significant impact to their business-critical trading levels.
“With the right support and investment from [the] Government, they would have the certainty to themselves invest in the future of their businesses, providing growth and employment opportunities in every community.”
VAT and business rates were pinpointed by the BII chief executive as two areas the trade body’s members need support on.
Alton said: “The secretary of state has highlighted his support for small businesses, but we need [the] Government to work with the pub sector to truly rebalance the unfair tax burden we have faced for decades, as well as assurance our members will not face further restrictions, regulations and taxation.
“Our members continue to place an overwhelming emphasis on the need for short-term measures with a reduction in VAT on all pub sales and a vital continuation of business rates relief until there is a full reform of their unfair and outdated rates system.
“We must also see parity in the relief for the devolved nations and finally a significant cut to duty on all alcohol sales in pubs, that can benefit their bottom line directly.
“With support and a level playing field, our vital, viable businesses can be at the heart o growth, opportunity and social connection in every high street, town and city across the UK.”
