Wells & Co invests in French estate due to 'negative' Budget impacts
The multiple operator told The Morning Advertiser (MA) while it remained "committed" to supporting its UK arm, it anticipated significantly "greater returns" as a result of investing in its French estate. This was particularly due to rising costs in the UK, including both wages and taxes.
Forced increased cost
Wells & Co CEO Pete Wells said: “Consumer confidence in France is currently stronger than in the UK. We believe the expected increases in the UK, (such as the rise in the minimum wage, a reduction in the National Insurance threshold for employers, and higher business rates), will force many companies to increase costs”
The recent Budget announcements, enforced by Chancellor Rachel Reeves on October 30, included a number of factors, such as reducing alcohol tax on draught products by 1.7% in cash terms, and increasing the rate of national insurance contributions.
The rise in National Insurance sparked industry- wide concerns for both growth and fears of further business closures across the hospitality industry.
Wells explained many businesses may also be forced to reduce overhead, postpone capitol expenditure and freeze salary increases. He detailed “there are enough repercussions in any of these scenarios to make us feel it will have a prolonged negative impact on consumer confidence.”
Other operators have also called the new effects of the Budget, a real threat, especially to the existence of family run businesses.
Predictable economic outlook
The Government also introduced legislation to increase employment allowance from £5,000 to £10,500. As a result, 865,000 employers will not be paying national insurance in the next year.
However, Wells outlined he believed France offers a “more stable and predictable economic outlook in the short to medium term.”
Other Pub chains such as Youngs, have estimated the new measures in the Budget would cost them around £11m. With recent figures from trade body UKHospitality (UKH), also estimating firms faced a £3.4bn hike in cost increases following the Budget.
Wells continued to explain that, despite the backdrop of uncertainty and rising cost pressures, the pubco remained fully committed to protecting and supporting its 150 strong UK pubs.
He added: “We are still looking at avenues to grow. Therefore, we are directing our capex budget to areas where we anticipate greater returns, which right now, on the back of the recent budget, is in our French estate”
