Country reels from crisis to crisis
British pubs are struggling to survive
By Victoria Robertz
1/15/2023 3:01 p.m
Pubs are as much a part of British identity as the crown and football. However, two years of the corona pandemic and ever-increasing prices for food and beer are presenting operators with ever greater challenges. Even the concessions made by the government will not change that.
Inside the “White Horse” in Droxford, Hampshire, it always looked a bit like a living room: checked carpeting, an open fireplace, old photos on the walls. The owners, Shekhar and Alex Nailwal, were just as popular with the villagers as their curry. The “White Horse” belonged – just like the “Bakers Arms”, the second local pub – to the inventory of the village with its few hundred inhabitants.
It was all the more painful for the small community that the Nailwals had to close the doors of their pub forever last year – they couldn’t keep up with the last rent increase. After two years of the corona pandemic and ever-increasing prices for food and beer, it was just too much. In order to be able to continue to operate the “White Horse” profitably, the operators would have had to double the prices – unthinkable in times when customers are also struggling with inflation.
Pubs are as much a part of British identity as the crown and football. And just as the island is struggling politically and economically from crisis to crisis, the pubs are also suffering. According to the real estate consultancy Altus, their number fell below 40,000 for the first time in the first half of 2022 and thus to a historic low. The fact that the number of pubs is decreasing is not a new trend. But the rate of shrinkage has picked up.
“Sales are practically eaten up”
A study by the Camra initiative (“Campaign for Real Ale”) showed that in the first six months of 2022, 485 pubs had to close permanently, almost twice as many as in the same period of the previous year. According to Nik Antona, Camra’s chairman, this has to do with a mix of lockdown consequences and inflation: “December is actually the most important month for pubs because that’s when the reserves are created for the next twelve months,” says Antona. “But at the end of 2021 we had stricter corona measures again and therefore poor sales. Many people could no longer afford the high energy and purchase prices this year.”
According to the National Statistics Office, energy prices in the UK have increased by an average of 65 percent and gas prices by almost 130 percent. To do this, the suppliers also had to raise their prices. This was difficult to manage, especially for smaller pubs, which used up their reserves during the pandemic years. “Sales are practically eaten up,” says Antona.
Many pubs – like the “White Horse” – have a special ownership structure that makes things even more difficult. In 2020, just over half of Britain’s pubs were owned by breweries or pub societies, which may include hundreds to thousands of pubs. The restaurateurs act as a kind of franchisee, have to pay the local rent to the companies and also get the beer from them. The companies set the prices, often above the market price. Camra criticizes the fact that large pub companies in particular regard pubs essentially as real estate investments and also manage them as such. With the “White Horse” it was the brewery company that imposed high fees on the Nailwals – and despite the increased purchase prices did not want to make any concessions.
Government helps the industry
In the third quarter of 2022, according to the hospitality association, turnover in the catering trade was still a slight increase of 1.3 percent. At the same time, double-digit inflation rates are weighing on innkeepers. In addition, there has been the ongoing rail strike in recent months, which, according to the association, meant additional losses of £2.5 billion in the second half of 2022.
Concerns about inflation are also driving British consumers. In an October McKinsey survey, just over half of respondents said they were struggling to pay their energy bills. The rising cost of living was cited as by far the biggest concern, well ahead of the war in Ukraine and climate change. The number of people who spend less money on restaurants or pubs as a result has increased significantly within three months, to around 50 percent. The pubs are threatened from two sides. “Instead of going to the pub and having a beer there, people buy their beer in the supermarket and then drink it at home,” says Nik Antona.
After all, the government is helping the industry by freezing the alcohol tax, for example. James Cartlidge, Finance Secretary of the Treasury, says the industry wants to be given “the greatest possible security” until a new, simpler tax system comes into force in August. This should give pubs advantages when selling alcohol, for example compared to supermarkets, where alcohol has usually been cheaper. And for the coronation of Charles III. an extension of the serving times is already planned for May.
“We have a desire to socialize”
The tax relief is also a response to ongoing criticism from pub lobbyists like Camra and BBPA (“British Beer and Pub Association”), who felt pubs were not adequately protected, especially in the first half of 2022. The BBPA, which claims to represent around 20,000 British pubs, is calling for energy bills to be cut and pubs to be protected from “unfair, hidden charges”.
In order to save costs, many pubs are now reducing their opening hours. In larger cities, it could be a solution to only be open from Thursday to Sunday, believes Camra chairman Antona. In smaller towns, however, he thinks that’s rather dangerous: “If the small community pub where I go every day is suddenly closed on Mondays and Tuesdays, I’ll look for another one. But then my old pub will lose customers.” In his opinion, it would make more sense to open every day but close earlier in the evening. Because more people are working from home, many professionals would be drinking their after-work beer around 5 or 6 p.m. anyway.
Nik Antona expects the trend of more pub closures to continue in the coming months. But the planned new tax system, the recent slight drop in inflation and belief in the British community still make him positive. “My hope is that the economic situation will normalize and people will come back to the pubs,” says Antona. “We have a desire to socialize, that’s our culture.”
This article first appeared on Capital.de