According to a survey conducted by UK Hospitality, businesses anticipate an 82% increase in their energy expenditures when government support ends this month. It could spell the last orders for many pubs struggling to survive the cost of living crisis.
When the Energy Bill Relief Scheme expires this month, the British Beer and Pub Association warns that the average pub’s annual energy bill will increase by £18,400.
Many taverns will go out of business, according to landlords.
Publican Warwick Heskins, age 54, has been in office for 23 years.
In 2014, he succeeded to turn around The Catherine Wheel, “one of the roughest pubs” in Newbury, Berkshire.
“It was completely run down,” he continues, “literally about to have its license removed, there were constant fights, it was known for drugs, it was literally on its backside.”
Mr. Heskins renovated it and, after two difficult years, transformed The Catherine Wheel’s reputation.
Due to the success of his business, he decided to establish a second pub in the area in July 2020, amid a pandemic.
The second business, The Spare Wheel, ultimately failed due to escalating costs, not the pandemic.
Mr. Heskins explains, “All the overhead expenses, energy costs, and everything else made it difficult to staff and make it cost-effective, so we decided to close it down and consolidate back to the original Catherine Wheel.”
But the expenses only increased.
“My revenues have not increased to pre-COVID levels, and my overhead expenses are probably 50% higher than they were before COVID,” he says.
“The cost of electricity has increased from £1,200 to £3,500 per month, as has the cost of gas and sustenance,” he continues.
“The majority of beverage suppliers are increasing beer prices by 10% to 13%, which you cannot entirely pass on to customers because you will run out.”
Mr. Heskins is not the only struggling pub proprietor.
While the number of pubs in the United Kingdom has been declining for decades, the energy crisis and the aftermath of the pandemic have placed more pressure on them than ever before.
In December 2021, there were approximately 37,500 taverns in Britain. Twelve months later, CGA and Alix Partners estimated that over 1,200 of these had ceased operations.
A UK Hospitality survey revealed that businesses anticipate an 82% increase in their energy bills following the reduction of the Energy Bill Relief Scheme this month.
According to Fiona Vincent, “Our industry is currently at the bottom of the food chain.” For fourteen years, she and her family have operated The Lion in Bristol. Her grandmother and great-grandmother both managed pubs.
In October of last year, a Tombola competition named The Lion the best site in the United Kingdom for a Sunday roast. Ms. Vincent does not wish to compromise on the quality of the ingredients due to the rising cost of food because they are imported fresh daily. Instead, she reduced the page size.
“You just have to keep redefining yourself,” she advises. And I believe that is quite shocking to some individuals.
Customers expect the original menu, but she can no longer afford to offer it because she is unsure whether or not the pub will be crowded.
Due to the cost of living crisis, more than 4,800 licensed establishments closed last year.
According to CGA and Alix Partners, nearly nine out of ten businesses that failed between October and December were privately held.
According to Ms. Vincent, “No one is truly looking at the individuals. It affects families.”
She contends that by “slapping on costs,” the government and others are forgetting the significance of “small businesses being part of the community.”
“We give a lot to people who don’t see many people. Many pubs do the same. They’re social spaces, and that’s essential to people.”
However, consumers are also experiencing a cost of living crisis.
According to Jordan Wallis, they cannot afford to go out as frequently. He previously managed The Railway in Doncaster until its closure in October.
The pub had existed since the late 19th century when it was constructed to facilitate Britain’s new national rail network.
“No one will want to drink in a cold pub,” Mr. Wallis says, so The Railway closed when the costs became unaffordable.
On August 1, Chancellor Jeremy Hunt cut bar draught beer taxes by 11 pence in his spring budget.
Emma McClarkin, CEO of the British Beer and Pub Association, says the respite is welcome but inadequate.
The duty on non-draught beer will increase in August, but the measures “will not offset the catastrophic impact” of “rising inflation and unjust energy contracts.”
The association is requesting that the chancellor reform business rates and reduce the “discriminatory tax burden” placed on the industry.
After April, pubs will worry about their energy fees.
Ms. McClarkin says the lack of help will “directly impact their ability to keep their lights on and doors accessible.”