What a Waste – A Bitter Taste of Lockdown for Business Owners in The Pub Trade

What a bitter taste for the small business owners in the pub trade because of lockdown -your best kept business secret small business magazine
What a bitter taste for the small business owners in the pub trade because of lockdown

87 Million. Let’s just say that again…Eighty. Seven. Million. That’s the amount of pints that the UK pub trade are having to waste because of our current lockdown predicament.

The British Beer and Pub Association (BBPA) called the waste – equivalent to £331m in sales – “heartbreaking” and Chief executive Emma McClarkin has urged the government to give publicans, many viewed as small business owners, more help in the Budget, including extending the VAT cut for the hospitality sector.

Marc Ford

Marc Ford

Editor-in-Chief, Business Media Owner, Business Coach, Author and Keynote Speaker. Works with over 100's of small businesses every year. Trusted by BBC TV and Radio, Channel 4, Mercedes Benz, Hitachi Capital on business matters.

At an average cost per pint of £3.81 in a pub, it means pubs have lost £331 million in revenue on beer that they have been forced to destroy as they could not sell it because of the three lockdowns and tier restrictions.

The trade association says this is revenue that would usually pay for hundreds of thousands of jobs in pubs and breweries across the UK, as well as the maintenance and upkeep of pubs in communities across the UK.

It is urging the Government, and Chancellor Rishi Sunak, to continue providing support to the sector in the coming months if pubs continue to stay closed.  With a Budget expected in March, it is urging the Chancellor to extend the VAT cut for hospitality and Business Rates holiday, as well as cut beer duty for when pubs reopen.

495,000 - That's the amount of baths of beer landlords are throwing away because of Lockdown in the UK
495,000 - That's the amount of baths of beer landlords are throwing away because of Lockdown in the UK

We Need Help

Emma McClarkin, Chief Executive of the British Beer & Pub Association, said:

“Our sector is in limbo. And at several points in the last 12 months pubs and breweries have effectively had to pour their revenues down the drain.

“We have no idea or clarity from Government on when we can re-open again. What we do know is if we cannot reopen in the near future, without further Government grant support and extensions to the job retention scheme, pubs and brewers will no longer have the cash left to survive and a wave of closures will be inevitable with jobs lost.

“Even when they can reopen, pubs and brewers are still likely to need Government support to help them kick-start their businesses again.

“With a Budget coming up in March, we are urging the Chancellor to continue to support our sector in what we hope are the final months of this crisis.

“£1 in every £3 spent in a pub goes to the taxman”

“If pubs remain closed beyond March, further grants need to be delivered to them and brewers. Without this, neither pubs or brewers will be around to brew and serve beer when we can reopen.

“Stimulus support is also going to be essential for our sector to kick-start again and lead the economic recovery. The VAT cut for hospitality, whilst welcome, has not been used as the sector has been closed. It must be extended. Likewise, the Business Rates holiday must be extended as pubs do not have the cash to pay it now because they have been closed.

“£1 in every £3 spent in a pub goes to the taxman because of excessively high beer duty. We pay 11 times more beer duty than Germany or Spain. Having been closed or facing restrictions for the best part of a year, now is not the time to be punishing pubs and brewers with the excessive beer duty we pay in the UK. The Chancellor must listen to the 490,000 people who have signed the Long Live the Local petition and cut beer duty in his budget to protect pubs and jobs.”

“Significant Support” – But Is It Enough?

Ms McClarkin asked Chancellor Rishi Sunak to keep the current 5% VAT ratefor the hospitality industry – down from the usual 20% – in place after pubs reopen, arguing that venues closed during lockdowns have not been able to benefit from it yet.

The business rates holiday – due to finish at the end of this financial year – should also be extended in the Budget, on 3 March, she added.

A Treasury statement said the hospitality sector was receiving “significant support”, including one-off grants worth up to £9,000, monthly grants of up to £3,000, and a £1,000 grant that was provided to pubs not serving food at the time during tiered restrictions when so-called “wet pubs” were forced to close.

”We’ve also extended the furlough scheme until the end of April, provided 100% relief on business rates, and have cut VAT for hospitality businesses,” they added.

“At the upcoming Budget we’ll outline the next stages of our plan for jobs to support businesses and families across the UK. That has been our priority throughout the past year and it will be the priority for the year to come.”

Re-opening Is Just The Start of Challenges

This is all well and good, but apart from the heartbreaking, (it is for me as a frequenter of many pubs, bars and clubs in 46 years), waste of drink, the continuing daily changes of ‘if, when, maybe’ you’ll re-open at this point is leaving many landlords who are also small business owners effectively, dangerously close to collapsing because of income versus overheads. 

Undoubtedly the British public will flock back to UK hospitality when it’s allowed to do so, but it will also have ‘newer’ challenges to deal with and could only be a short-term boost to the industry. As a public we have bought 40% MORE alcohol from Supermarkets, as well as an increase in take-aways, home cooking and entertaining at home, (when we were allowed to). As unemployment increases and the economy rises out of it’s slumber, the cost of ‘going out’ will begin to play a part. Add to that social-distancing measures, capacity, empty towns and cities because of High Street collapses, the industry will have to learn and overcome fast to avoid a catastrophic collapse for many hard working small business owners.

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Business Coach, Author and Consultant. Has worked with BBC TV and Radio and Channel 4 on business matters. Trusted by Mercedes Benz, Hitachi Capital. Keynote speaker.