In 2002, there were 53,900 pubs in the UK. Twenty years later, it is reported that the number of pubs has reduced by over 25% (down to 39,970). It begs the question, where have all the pubs gone?
Across the country, it is no secret that the hospitality and leisure sector has had an incredibly difficult time over the past few years. First, with the Covid-19 pandemic forcing customers away from hospitality venues and now, with the cost of living and energy crisis' squeezing customers' disposable income each month, businesses in the sector are, once again, having to prepare for troubling times for the remainder of 2022 and into the new year.
Not only are consumers faced with a significant rise in day-to-day costs, but the increased costs that pubs, bars and breweries are facing have not gone unnoticed or unreported in the sector.
The Campaign for Real Ale reported that between January and June 2022, the rate of long-term pub closures in the UK was 18.7% per week (almost double the figures from 2021). Not only this, but recent headlines state that 7 in 10 pubs are at risk of closing this winter. From local community pubs to larger outfits, including craft beer chain BrewDog, which has announced in recent weeks it will be closing six of its pubs across the UK, to some of the largest pub and brewing groups in the UK, such as JW Lees, Carlsberg Marston's, Admiral Taverns, Drake & Morgan, Greene King and St Austell Brewery calling upon the government for urgent intervention.
We saw some innovative solutions put forward by the government during the Covid-19 pandemic.
The Eat Out to Help Out scheme, which ended over two years ago on 31 August 2020, saw the government subsidising consumers' meals and non-alcoholic drinks on weekdays to encourage more people to visit pubs and restaurants. This scheme was incredibly popular; it was reported that over 160 million discounted meals were claimed in August 2020, but it has not reversed the ongoing decline in the number of pubs in the UK. To date, we are not seeing any signs that the scheme will be reintroduced to encourage consumers to visit their local pubs. However, it may be that a similar scheme would not work today. In 2020, household savings were higher, with Covid-19 decreasing households' weekly spending, meaning households had spare cash to spend at their favourite local.
Fast forward to 2022, and consumers are now faced with increasing expenses, the demanding challenges of inflation and rising costs of fuel, mortgage repayments and food.
That said, the newly appointed Prime Minister, Liz Truss, has recently announced the automatic energy price guarantee that is being introduced into households from 1 October 2022. In addition to the announcement that consumers will welcome, the government has announced further plans to provide longer-term financial support to businesses which are particularly vulnerable to the soaring energy bills, such as those operating in the hospitality sector.
Unlike households, pubs have not been able to benefit from the energy price cap, and therefore, the government's initial six-month scheme is set to provide equivalent support that is being provided to consumers and deliver more transparency in relation to energy costs.
Not only is the sector currently facing the harsh reality of increased energy bills, but it is also heavily affected by the ongoing rail strikes.
Whether a seaside destination, city hotspot or country pub, the rising fuel prices and ongoing rail strikes are making it increasingly difficult for consumers to travel to eateries and public houses around the country, and when they do, they have less money in their pockets.
There is a consistent message across the board – keep costs down. Whether that is limiting times when food is available (reducing costs of the kitchen) or limiting wastage, keeping the overall cost of running a venue down should assist in trying to keep profit margins at an acceptable level. Where the shortfall cannot be made up with innovative cost-saving solutions, it is no secret that businesses have been forced to pass on some of the increased costs to their customers.
Staff and supplier costs are often the most significant costs in hospitality businesses and should also be reviewed.
If your business needs assistance with reducing staff costs without falling foul of the law or reviewing supplier contracts to help reduce costs, please contact our Hospitality and Leisure Solicitors below.
