With hospitality venues allowed to open indoors since Monday 17 May, an important milestone has been reached on the road back to commercial viability for the hospitality sector. Under the ‘outdoor only’ trading restrictions in April it was just not viable for many outlets to open, with industry estimates suggesting that around 50% of pubs opened (much lower in terms of restaurants). This was certainly reflected in the Timothy Taylor’s pub estate. Of our nineteen outlets, only nine felt able to trade under the ‘outdoor restrictions’ yet all but one are open for business after 17 May with trading allowed inside.
While a welcome step, it is vital that we all, and especially the government, recognise that this is just one step on the route to survival for these outlets given the impact that Covid has had on their ability to open and trade during the past year. From 17 May, pubs will continue to be hampered by restrictions such as social distancing, table service only, and the rule of six. According to the British Beer and Pub Association (BBPA) this will lead to 5% of pubs (2,000 outlets) remaining shut and those that open trading at about 65% of normal, well below the break-even point for most outlets.
This goes to the very heart of the economics of this important sector. These are small businesses, often run by a husband and wife or a couple of friends. Like any business, they are not viable when incurring virtually all the costs of being open but with a fraction of the turnover associated with ‘normal’ times. I am constantly amazed that I still come across people who think that if a pub or restaurant is doing 80% of their usual turnover, they must be earning 80% of their normal profits. Afraid not. That missing 20%, even 10%, of turnover IS the profit, and without it the viability of the business and the livelihood for the publican is gone.
These challenging financial dynamics do not even touch on the fact that many of these operators have taken on significant debt in the past year in the hopes of survival. According to UK Hospitality, pubs, restaurants, and hotels have built up £2 billion of rent debt and £6 billion of government loans during the past year, equating to an average debt of £73,000 per premises.
This staggering figure is behind what many see as conservative estimates that at least 2,500 pubs will close between now and the end of the year (and countless restaurants and other hospitality venues).
So, as well as your custom, what does our industry need from government?
- That all steps necessary continue to be taken to ensure restriction free trading from 21 June. This means continuing the strong vaccination programme and an effective test and trace system to ensure our sector is not subject to a further - and what I fear will be catastrophic - lockdown.
- That the government stop demonising our industry and be fact-based in their approach. Many pubs play a vital role in their communities in promoting responsible drinking, socialisation and combating loneliness. Most have worked hard to be Covid-secure. So, it makes operators angry when the government implements curfews with no evidence or closes our industry using a ‘dodgy dossier’ containing obscure examples from Asia.
- In March of this year, I listened aghast as the Chief Executive of Admiral Taverns was interviewed on BBC radio and patiently explained to the journalist how Public Health England data supported the safety of pubs, only to get the response: “…well it’s about perceptions…” - I am not sure how she would feel if her life’s work or livelihood was threatened by ‘perceptions.’
- That the government reviews the support and cost base under which hospitality must operate, including VAT, alcohol duty levels, and rates. For example, before the pandemic, pubs accounted for 0.5% of business turnover but paid over 2.8% of the rates bill.
- While the assistance the industry has received during the pandemic has been most welcome it seems ironic that in the same breath extra costs and red tape are being placed on our sector.
- You may be surprised to read that the Health and Social Care Department has just announced that the Government intends to introduce calorie labelling on menus and food labels in out-of-home food businesses (including pubs and restaurants) from April 2022 with information needed to be displayed “at the point of choice for the customer, such as physical menus, online menus, food delivery platforms and food labels.”
Why am I so concerned about the sector?
Besides the fact that Timothy Taylor’s depends upon pubs to serve the real ales for which we are famous, it goes back to my discovery of the British pub when I first came here from America to study in 1978. It is something truly unique and it struck me as a very different and welcoming experience compared to the American ‘bar culture’ that I was used to. Pubs play such a central role in their communities and they are also vital to the UK’s attraction as a tourist destination. A few years ago, when my brother came to visit us from the States, literally the first thing that he and his wife wanted to do was to meet my wife and me in a pub where we could sit down, have a pint and catch up.
I appreciate that against the significant deaths and illnesses caused by Covid talking about pubs and socialisation might seem trivial or insensitive to some, but I also think that in these challenging times we all need to see some sort of light at the end of the tunnel. Surely getting back to the pub and enjoying the company of friends and family, whether to celebrate or commiserate or just enjoying being in the company of strangers is absolutely vital to this?
Given the events of the past year, we cannot take pubs for granted. The government cannot take pubs for granted. To quote Joni Mitchell: “You don’t know what you’ve got till it’s gone.”
Tim Dewey, Chief Executive of Timothy Taylor's