It’s looking like an incredibly difficult two or three years head. Hospitality has been closed for 18 months to two years, due to Covid, and Brexit is a massive issue. Now there’s the narrative being spun about the impact of the war in Ukraine – all this on top of rising utility bills and staffing problems, which only compounds the current situation we’re in.
Of course, it’s not just our industry that has been hit. But because of the nature of hospitality, we are also directly affected by what’s happening in other industries, from farming to imports, exports and utilities. Running a pub is so much more than about serving beer. There are many variables to it, such as travel and tourism, which pubs in big cities or coastal towns need to survive. Then there are the pubs placed centre of their communities, where the rising day-to-day costs are huge.
Community pubs will suffer additional heart-felt pain, as they know well the importance of their offer on their locals, who will be facing rising bills and increased cost of living. Putting prices up in these pubs is going to be hard, because you know it will hit your regulars the hardest.
While lockdown served to highlight the importance of the local pub – holding the fabric of our very society together – this relationship is now under attack from mitigating, and some self-inflicted, circumstances: there is nothing positive to come from Brexit and I believe those who voted for it were sold a dishonest narrative.
People seem confused about economic immigration versus refugees – this country is reliant upon a transient workforce, one that is connected to Europe. It is what gives a buzz and an energy to the spaces we operate in and without it, it makes staffing very difficult.
We’re in a situation where wages are rising and people are being asked to do more and more, causing burnout. It has gone beyond the money and it’s now about the workload on staff. If pubs are to be able to open seven days a week, they need to employ a lot of people to make that work. People outside the industry see a pub opening at midday and think that’s when work begins, but as we all know, we’ve been in the pub since 7am, taking deliveries, cleaning, setting-up and getting ready for opening. To open from midday to midnight requires a pub to operate for 18-hours.
I also fear we are sleep walking towards the inevitable rise in VAT, where the 7.5% will disappear back to the taxman, instead of sitting on our bottom line and making the P&L balance sheet look okay. Take that away and then look at moving to a five day week, where the costs remain the same, and it’s a difficult proposition. If pubs opt to close on Mondays and Tuesdays, or not open at lunchtime, to reduce working hours, that affects revenue and the bottom line.
We know that every pub needs to be busy on Friday, Saturday and Sunday lunchtime, but that’s not the end of it. Our profit margins are made in that last 10% and that’s about having a busy trade on Tuesday and Wednesdays, without which our businesses cannot be profit-making.
We’ll be working ever harder and losing money, with the inevitable outcome being pub closures. Businesses are already having to reshape what they do, remodel their offer to find a way to open with fewer people and service the higher costs. It’s a very difficult world to operate in.
Now is the time to see what we can do. Revisit our customer base, think about what price stretches they can accept. Are your customers the sort who are looking for a cheap offer, or high quality service? Ask yourself, how can I be more efficient? Streamline and reduce the menu lines, the bar offer, the hours staff work. Look at everything you can do to cut and minimise costs.
The good news is that people have an appetite and want to come out and experience the buzz. And, I believe there is an exciting spring and summer ahead – fingers crossed.
The prospect of few, if any, restrictions, outdoor dining and festivals will attract people who really want to reconnect with each other in a true way. Be ready for that positive energy and prepare to be busy – while ensuring you stay efficient at all times and stay true to the reasons you set up your business in the first place.
That said, this is also a good time to look at your business and alter what isn’t working. There will be understanding and compassion from your regulars about why you might need to change. Seize every opportunity and change for the better.
When looking to streamline your business, think about why you have so many items behind the bar, why you open the doors at 12-noon when the first drinker might not come in until 3.30pm. That’s 3.5 hours you can save there. Reduce your lunchtime offer, so you can run it with a smaller team.
Don’t get into the wage race either. Over-offering on wages won’t necessarily bring the right people into your business. Pay your best team members well and make them feel valued. And it’s not only about money, you could offer gym membership, staff discounts, better working hours – look at the bigger picture.
The harsh reality of the last few years means we will lose pubs. Costs are too high across the board and for some, a pint of beer is seen like a cup of coffee – a quick throw-away thing to have. They don’t think about all the costs that are associated with serving that great pint in a pub setting. It’s not cheap, it involves paying rent, staff, utility bills, VAT – all of those things no longer add up to a £5 pint of beer any more.
If pubs become too expensive for people to pop in for a quick pint after work, wet-led places in particular will be hit. Customers will become more choosy about when and how they spend their money, as well as how often they go out. This is going to leave gaping holes in the P&Ls if pubs are only going to be busy at the weekends.
Watch or listen to the news or read social media and it’s a depressing world out there. And this is where pubs can come into play – an escape from the doom and gloom.
Keep your positive mindset and remember it’s not easy, but working in hospitality has never been and will never be easy – know that we will come out of the other end. This isn’t going to be forever. So, don’t moan to customers about your price rises, or what an arsehole Putin is, they have come into your pub to escape reality and to enjoy themselves. Your role is to provide positivity and this will help your business survive.
It’s about the mindset. Dig deep and you will get through it. There is a difficult, long road ahead and you will have uncomfortable phone calls with your suppliers and utility companies. It’s going to be the same for everyone, myself included. But we’ve got through recessions before and we will get through this. Remember, hospitality is an exciting place to be. You meet amazing people and we have the public on our side.
