“Stagflation” Stopping Sector from Realising Full Potential say Leaders

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Stagnant Inflation Is Holding The Sector Back

Michael Kill CEO NTIA Says “Figures announced today shows no movement in inflation at 8 7%, replicating the rates released in April this year This is a stark reality check for the Government, leaving inflation incredibly high that it is having a huge impact on consumers and businesses spend and investment Even with warmer weather and numerous bank holidays and national celebrations to strengthen trade , it has not been enough to alleviate the onerous cost of operating for businesses or extend the frequency or spend of consumers looking to go out and enjoy a meal, music event or a social drink amongst friends ”

The Government must consider tackling inflation by bringing down the costs of energ y, food and drink through tax cuts, and look to ease workforce shor tages, with broader considerations around deregulation, and the ability for businesses to invest in expanding trade without bureaucratic limitations or timescales ” UKHospitality Chief Executive Kate Nicholls added: “Measures to tackle sky-high energ y costs, bring down the cost of food and drink and ease ongoing worker shor tages would be effective measures to bring down the cost of doing business, and in turn help reduce inflation ”

British Beer & Pub Association chief executive Emma McClarkin said: Warmer weather has been driving sales for pubs and breweries, but the fact remains that without inflation falling, profits are wiped out and our sector has little to no oppor tunity for growth These figures are worr ying because while the public have been suppor ting British pubs and breweries, it’s clear that purse strings will be tightened once again in the coming months and UK businesses will be impacted by that We need the government to face the reality that inflation is still incredibly high and the critical impact this has on both consumers and the businesses they choose to spend their money with ”

UKHospitality Chief Executive Kate Nicholls said: “It’s frustrating to see that the rate of inflation remains stubbornly high, with no decrease since last month s figures It s clear that the ongoing high costs of doing business being passed on in prices is a contributor y factor and this needs to be tackled with urgency

“Measures to tackle sky-high energ y costs bring down the cost of food and drink, and ease ongoing worker shor tages would be effective measures to bring down the cost of doing business, and in turn help reduce inflation ”

Pubs Closing At Fastest Rate For A Decade

The figures come as fur ther research reveals that ubs are closing at the fastest rate ten years, with analysts warning that of fur ther closures

200 pub businesses entered insolvency in Q1 2023, 620 over the last 12 months, representing a 68% increase on the previous year (369)

Mounting energ y prices over the last year have piled pressure on pubs balance sheets, as have increasing wages and a slowdown in consumer spending in response to the rising cost of living, driving pub insolvencies sharply over the last year

Exper ts have warned that the Bank of England’s 12 successive interest rate increases will accelerate the rate of closures as the year progresses

“Rising interest rates will increasingly leave highly leveraged businesses in the restaurant sector unable to meet loan repayments At the same time banks are clamping down harder on non-performing loans,” Price Bailey said

A shor tage of staff compounded by high utility prices has forced pubs to cut operating hours meaning they are unable to maximise income

Price Bailey also said that banks who have lent cash to pubs and bars are likely to ignore the UK economy ’ s better than expected performance this year and demand money be repaid quickly Separate data from National Statistics commissioned by Price Bailey reveals that optimism among publicans is on the rise despite the increase in business failures

Twice as many British pubs (35%) are now repor ting turnover is rising as opposed to than falling (16%), a remarkable improvement on six months ago when just 7% were repor ting rising turnover compared to 58% saying takings were down

Increasing Pressure

“There is often a lag between a return to more robust economic activ- ity and declining insolvencies,” Matt Howard, head of the insolvency and recover y Team at Price Bailey, said

“Banks will likely star t to put increasing pressure on debtors to perform or pay off loans Focus will star t to shift from financially stressed businesses to star tups and those with better prospects, which may mean that insolvencies continue to rise despite many pubs seeing improved takings,”

“Pubs are still facing soaring costs coupled with an ongoing squeeze on the disposable incomes of patrons The impact of rail strikes, which hit the pub trade hard during the peak Christmas par ty period, have been felt most by pubs in city centre locations Hospitality businesses with a more diversified offering geographically and in terms of ser vices such as food and accommodation have tended to fare better ”

Howard said “Publicans are still having to restrict opening hours and scale back the ser vices they provide to customers Not only has it become more difficult to justify opening during off-peak hours due to high energ y costs, but lack of staff has compelled more pubs to focus on their most profitable business hours ”