Research conducted by the British Beer & Pub Association (BBPA) suggests that 37% of pubs in the UK cannot break even one month after reopening.
The finding, from a survey of the trade association’s members, comes a month after pubs in England reopened on 4 July after the coronavirus lockdown. In the same survey, 25% of brewing and pub sector businesses said they didn’t feel their business was sustainable beyond the end of March 2021 at present.
The BBPA said that measures introduced by the government to mitigate the danger of spreading the virus, which include ‘one metre plus’ social distancing in all pubs, one way systems, dividing screens and table service, are impacting the viability of reopened pubs by reducing customer capacity. They are also being adversely affected by consumer confidence to go out which is only gradually starting to return.
The trade association highlighted that pubs in city centre locations are being particularly affected due to many offices remaining closed, resulting in even greater reduced footfall.
The BBPA said welcomed initiatives such as the Eat Out To Help Out scheme and the VAT cut to food and accommodation in hospitality and pubs to help boost the sector, which it hopes will have a positive impact on pub sales in August.
However, it says further support is still needed for the pub and brewing sector in the medium and longer term to enable them to fully recover. It also said the Government needs to play its part in helping build public confidence to go out and visit pubs and hospitality again, with consistent and positive messaging about their reopening.
In particular, the trade association said more support is needed for community pubs who tend to only sell drinks or small food items, and so are less likely to benefit from VAT cuts to food and the Eat Out to Help Out scheme.
It suggested that the Government should cut beer duty by 25%, cut VAT on beer served in pubs and fundamentally reform business rates to enable the beer and pub sector to fully recover and help grow the economy once more.
Emma McClarkin, Chief Executive of the BBPA said: “One month after they were able to reopen in England, over a third of pubs are struggling to break even or turn a profit. This is inevitably due to lower consumer confidence and reduced capacity for pubs.
“We fully support the Eat Out To Help Out scheme and the temporary VAT cut to food and accommodation in pubs and hope they will help boost pub sales. However, to ensure the full recovery of our sector, including Britain’s world class brewers and pubs at the heart of communities across the UK, we need the Government to increase its support.”
She added: “£1 in every £3 spent in a pub goes to the taxman and now is the time to reinvest that money in our brewers and pubs. That means cutting beer duty by 25%, as well as making the VAT cut permanent and extending it to beer in pubs to bring the cost of a pint down and unlock investment.
“Fundamental reform is also needed of the business rates system – pubs pay 2.8% of the business rates bill, despite accounting for just 0.5% of turnover.
“Crucially, the Government must play a leading role in building public confidence to go out and visit pubs again, by delivering consistent and positive messages about their reopening.
“Our sector is a resilient one, and 75% of brewing and pub businesses say they are sustainable at present, but that still leaves 25% that are struggling and it would be catastrophic for our culture and economy if they are denied the support they need.
“Now is the time to recognise and invest in our pubs and brewers to secure them for future generations and to enable growth.”
NAM Implications:
- Is anyone really in any doubt re continuing viability of pubs operating at 50% capacity, at best?
- Time for pubs to regard as structural the market changes brought about by lockdown (i.e. Social distancing, working-from-home, consumer fear and unwillingness to spend).
- Government need to focus on correcting taxing anomalies (i.e. business rates imbalance, excessive beer duty, permanent cutting of VAT)
- Whilst pubs need to face the reality of reduced traffic (permanent?) and cut to fit…
- …before someone does it on their behalf.
