British pubs ‘endangered’ by soaring inflation

Many of the UK’s traditional pubs will be forced to close due to the current wave of inflation in the country, with energy costs soaring by up to 300%.

The warning was made by the directors of the six largest breweries in the country, who called for “immediate government intervention” in the high energy bills.

The pub and brewery owners of six companies—JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan, Greene King and St Austell Brewery—are on the board of the BBPA (British Beer and Pub Association).

In an open letter to the government, they called for urgent intervention, including a support package and the imposition of a cap on energy prices for companies. They say that without government support the energy crisis will cause “real and irreversible” damage to the sector.

The price crisis comes at a time when the number of pubs in England and Wales is falling, having hit the lowest level on record — 39,970 in June.

Simon Cleary, who runs the Plow pub in Great Chesterford, Essex, said his gas and electricity bills had nearly tripled to £35,000 a year.

This means the pub now needs to generate more than R$10,000 in revenue per week to cover costs.

“I think it will be very difficult unless there is government intervention,” he told the BBC.

Chris Jowsey, managing director of Admiral Taverns, a company with 1,600 pubs, said his pubs now pay more in energy bills than in rent.

He told the BBC that one of his franchisees decided to leave the pub after 20 years due to a 450% increase in his electricity bill – a cost he is unable to pass on to customers.

Jowsey said Admiral is investing in energy-saving equipment for cellars and trying to control the use of refrigerators. He also said the company is “looking into very detail a plan to try to buy energy directly” on the market, but adds that “even when we went to the energy market in the last few months, nobody was initially willing to supply us.”

“We desperately need government intervention to help because, in fact, the market is broken.”

The Department for Business, Energy and Industry said “no government” would be able to control the “global factors that put pressure on energy prices and other business costs”.

“But we will continue to support the entertainment industry in the coming months,” a spokesperson added. The government said it provides a “50% business tax relief to businesses across the UK, freezing taxes on beer, cider, wine and spirits, and reducing employer national insurance”.

Waiting for the new premier

The government said no policy will be announced until the new prime minister is confirmed on 5 September. Conservative politicians Rishi Sunak and Liz Truss are vying for an election within the Conservative Party to succeed Boris Johnson, who resigned as prime minister last month.

“I think it’s amazing that we have to wait for a person to be elected before we make some decisions and some policies that will protect not just jobs, not just people’s livelihoods, but also their homes — because most people who run bars in this country live in the mezzanine of their own pub,” said Jowsey.

Nick Mackenzie, director of Greene King – one of the UK’s largest pub groups, with more than 3,100 establishments – said his company faces “the prospect of pubs being unable to pay their bills, with jobs being lost and pubs loved ones across the country forced to close their doors”.

He added that this would mean that all the support given to the sector during the pandemic “may have been wasted”.

Last week, energy regulator Ofgem said it would raise the price cap on domestic energy bills by 80% in October.

But unlike homes, businesses aren’t covered by a regulated energy price cap, which means their bills will go up even higher.

Tim Martin, founder of the Wetherspoon pub chain, told the BBC that his company had signed energy deals by September 2023.

In addition to the price crisis, breweries also fear a possible shortage of carbon dioxide (CO2), which is used in beer production.

CF Industries, the UK’s biggest CO2 producer, recently announced that it would temporarily halt production at one of its factories because rising energy prices have made its costs too high.

Andrew Taylor, managing director of Mr Fox pub in Croydon, said the price of cooking oil had tripled and food costs were “starting to go way up”.

He said his business was absorbing many of the price increases, but warned that he would eventually have to pass the costs on to customers.

“It’s incredibly worrying,” he added.

Emma McClarkin, chief executive of the BBPA, warned that rising energy bills could do more damage to the sector than the pandemic.

According to one report, 400 pubs in England and Wales closed last year and around 200 closed in the first half of 2022, as inflation began to take a toll on profits. This reduced the total number of pubs to the lowest level since records began in 2005.

This text was originally published here.