When it comes to a New Year’s wish list, Terry Wheatley, the Trade Director of the family-owned pub company, Exeter-based Heavitree Brewery, wants a level playing field established, so that hospitality can compete in an open market. He would also like some new ground rules around employment, to make pubs more appealing to a younger workforce.
The hospitality industry is about people. No matter the gizmos or gadgets that make the job easier, it’s the quality of people that makes the difference. And to win and retain the best people, we must become a sector young people aspire to work in. But worryingly, when I look at my own son, who has worked in pubs and currently works for a major drinks company, I see that he and others like him aren’t interested in a career running or working in a pub, and I fear we are missing out on some of the brightest and the best talent.
I see the amazing work that organisations are doing to bring people into our sector, but in my view, until there are radical changes to tackle the long hours and unsociable nature of the work, there will remain a barrier. We must make meaningful changes that will get young people excited about working in this fantastic industry, and will encourage them to build worthwhile careers that deliver the right work-life balance for them.
A four-day week, at least one weekend off every month, no split shifts and hours that won’t burn people out after a busy season. Perhaps it’s too much to ask! Our tenants laugh at me when I suggest this is what’s needed, as they tell me it’s hard enough to find one person to do a job without effectively needing two people to cover one role across the week – although we do have tenants who close on Mondays and Tuesdays, and that works for them. I am, though, in no doubt that as an industry we need radical change, otherwise we are not going to attract the next generation of entrepreneurs – the people we need to successfully run the pubs of the future.
We’re incredibly lucky at Heavitree. We don’t have lots of pub vacancies, sometimes one or maybe even two, and we have plenty of families who are second generation running our pubs, which is something that makes us very proud. We operate a flexible business model, offering a range of tenanted and leased agreements, and free-of-tie options. Most of our 60 pubs operate on three-to-five-year contracts, 5% are free-of-tie and a very small number have 10-15 year leases.
I like to think if there are good managers or licensees out there, who are looking to take on their own business, they will talk to Heavitree because of our reputation. We don’t act like a landlord per-se, but see our tenants as our customers. We want to help them make the most money they can, because without them, we lose money. One of the biggest costs to our business is when there is a change of tenancy, therefore we work to reduce changeovers. Our rent reviews are based on fair discussions with the tenant and, over Covid, we fully supported them with a rent freeze. Apart from two tenants, who were leaving anyway, we didn’t lose anyone over the pandemic. In fact, we welcomed new tenants, Chris and Harriet, and carried out a refurb on their new pub, The Pewsham in Chippenham. The pub now has a coffee shop, extensive outside space and was the first of our sites to benefit from an underground heat source pump. But post-pandemic, it has only become harder for our pubs to recruit staff. When I joined the industry, aged 16, I was happy to work hard and learnt how to play hard. I enjoyed the sociability of the trade. But people’s lives have changed. Lockdown showed them that there was life outside of work, and now they want to live differently. Because people are the crucial ingredient of any successful business, and if a pub is to wow customers, there has to be the amazing service and team. And this has never been more important than at this time, when every pub is having to increase its prices.
Everything is more expensive than 12 months ago, and while 2023 was a tough time for many, the year ahead is going to be just as tough. Many more pubs will have utility contracts expiring, and while energy prices are not as bad as they were, costs are still much higher than before the war in Ukraine.
Pub operators must remain focused on driving standards and creating the best service and experience for their customers. But frustratingly, this isn’t enough, because they must also run occasional promotions to compete against the supermarkets’ offers. Deals that tempt customers with a takeaway meal and slab of beer to consume at home – especially appealing during the cold, dark months of January and February, the toughest time for pubs.
Collectively, hospitality is calling on the Government for support: from lowering VAT to the continued reduction on business rates. But my view is that we shouldn’t be asking for support but demanding the right to operate on a level playing field – a marketplace established where hospitality can fairly compete for a share of the consumer purse or wallet. It’s also difficult to invest in your business, when you’re paying high end for everything, from labour and goods to energy. The list of price rises goes on and everything is at least doubling in cost, if not quadrupling, from what it was pre-pandemic. Business rates – a form of tax on a business’s bricks and mortar, rather than profits – require a radical overhaul. In fact, I’d like to see it scrapped altogether, because it doesn’t work and it’s unfair. The business rates system has been broken for at least 15 years, as I remember complaining about it back in the early 2000s and nothing has changed.
For pubs to survive and to prosper, hospitality needs to be treated fairly and to be allowed to operate on a level playing field. VAT needs to come down to 17.5% or 15%, or even zero VAT on food. Why should a supermarket be able to sell certain food items at zero VAT, but because we buy, prepare, cook and serve food, we have to pay VAT? I understand why food needs to be zero VAT for families to feed themselves, but when off-sales in supermarkets directly hits pubs, why can’t a 5% cut in VAT be allowed to give pubs and hospitality a fair chance of success? The fewer pubs that close as a result of a fairer system is better for all. Licensed premises are the most regulated format of selling alcohol anywhere, unlike off-sales, which leave consumption unregulated. If the Government has the foresight to give hospitality a level playing field, it would still gain the income to maintain the needs of the country, as such funds would return to HMRC through one of the many other means of taxation. And it would also allow our publicans to invest in their people and business.
Running a pub is a way of life and to be successful, publicans become part of the fabric of the societies and communities they serve. Our tenants are the stars of the show, working day in and night out to support their great teams and to provide the best experience for their customers. Add to this that hospitality needs to appeal to the brightest and best young people to continue to survive and prosper – leaving me in no doubt that it’s time for radical solutions and change in order to create a better and more positive trade for the future.
