Welcome news today on energy costs for businesses.
However, I'm increasingly of the opinion that the commercial model that's worked for pubs in the past is fundamentally broken and no longer sustainable.
A thread... 1/8
@Kate Nicholls OBE @The BII @The Morning Advertiser @PubsAdvisoryService
Margins were already thin prior to the spiralling costs we’ve seen this year. Now most operators simply can't cover those costs. Aside from the well publicised energy costs, staff shortages & impact on payroll are especially hard to reconcile. 2/8
If, as a society we value pubs and want them to stick around, something’s got to give. Will consumers be happy to pay 25% more for drinks and food? Unlikely. We need a permanently lower VAT rate for hospitality to give us sensible margins and the industry a chance to prosper. 3/8
Better margins, doesn't mean bigger houses and cars for pub owners – it means we can invest properly into our businesses and people. It means we’re not constantly trying to pare the number of staff on duty down to the bone. We can offer job security. 4/8
We can ensure pub owners don’t work 7 days a week for minimum wage. It means we can keep more pubs open that provide an invaluable role in bringing their communities together. 5/8
France, Italy, Spain, Ireland, Greece are just some of our European neighbours who have VAT rates 9-13% for hospitality. That gives them sensible margins and keeps the sector viable. It’s simply not sustainable for us at 20%
We also need an overhaul of how business rates are set for pubs. The current system is fundamentally flawed meaning pubs can pay many times as much as comparable restaurants. Frankly, it’s a complete stitch up. 7/8
Unless something changes, I fear the only pubs that will be able to survive will be those that are either run by large chains with corresponding economies of scale, or single site operators prepared to live above the shop and work 7 days a week for a pittance. 8/8