Speaking at the MA Leaders Club conference in Oxford on Wednesday 2 October, Liberation Group CEO Jonathan Lawson said operators were talking about wage costs “more than any other issue” and the sector needs to start raising awareness of the impact on firms.
He continued: “We love to see people come through our business and progress and that’s exactly what we are seeing.
“But if we see another three years of inflation and NLW increases like we have the past three years, it is going to be really tough, and our sector needs to change our tone on this and be less nervous about calling it out.
“We need to stop focusing on things we have no chance in getting. We need to stop talking about VAT [cuts], because frankly we aren’t going to get it. Whereas NLW is needed by us and the Bank of England to bring the Government back in line.”
More damaging
Lawson also explained wage increases were particularly worrisome for tenanted businesses as managed firms can weather the storm somewhat easier, but that NLW rises were one of the biggest threats to the industry.
“You get down to the bottom line and it is really tough and wages are the big figure that is more damaging than anything else at the moment; I just don’t see it going away”, he said.
Brakspear CEO Tom Davies added business rates were also a worry for the tenanted sector. “It is tough, and headwinds are coming. If we don’t get some relief or if the status quo isn’t carried on I do worry”, he said.
To combat these challenges, Davies said Braskpear had focused on “very careful management of staffing costs” and were always looking to hire “more experienced” people to help boost productivity.
Looking ahead to the Budget, Lawson said he was “glad to see the back of the last Government”, he feared “defeat could be snatched from the jaws of victory” on Wednesday 30 October.
He continued: “[There’s now] an environment or atmosphere where we seem to have spooked customers and businesses at the same time, which seems somewhat unnecessary.
“We can change the rhetoric, but they aren’t going to listen and therefore we need to look at other ways of mitigating those costs and look for support elsewhere because I think this Government is going to want to increase the NLW.
“The early actions of the Government seem to be more friendly towards their traditional friends than some of the newer friends they were supposed to be seeking.
“From a business point of view, I was feeling really quite positive [and] encouraged about next year, but 30 October could be quite painful.”
Resilient trade
Brakspear’s CEO added while there had been some “optimism” and “reasonable trade” in the lead up to the election, this was now “gone”, and September had been an “equally bad” month for most operators.
However, the sector’s resilience in the face of persistent headwinds has “worked against” those who love and work in the trade, Liberation’s CEO said.
Lawson continued: “Anybody within the sector does it because we love it, it is really hard but there is an awful lot going for our sector and pubs have proven themselves time and time again as being able to adapt.
“We are a resilient trade, and the Government thinks whatever they throw at us we come on top and that does play against us.
“The Government thinks we always come through. We need to change our tone [with them] and be more antsy. They all like to take pictures in our pubs during the [run up to] elections.
“We do some much for communities and that’s the key message to get across to show how important we are.”
