378 pubs facing closure following beer duty and VAT increase
Warnings by the BBPA, the British Beer and Pub Association, state that one pub will close every day in the UK this year. They estimate 378 pubs will close in 12 months across the home nations. 5,600 job losses will be directly caused by pub closures.
It’s been a longstanding issue, that organisations like NTIA and NDML have been shouting about for a long time – British pubs are struggling to make a profit and will be lost. Outcry from the most recent government tax increases have sent shockwaves through the media, once again putting pubs and bars back on the front page of newspapers and tabloid webpages.
BBPA’s latest statistics provide a transparent view of how the government’s business rates reform could hurt pubs. They calculate that for every £3 spent on food and pints, £1 goes toward tax. Pubs are now £14,000 worse off per year on average.
The news comes at a disparity to what we are seeing on our highstreets. The recent bout of good weather mixed with plentiful sport on offer, such as Wimbledon and the Women’s Euros, are meaning pubs are seeing high footfall. Unfortunately, most of the money spent on a pint is going straight out of the till due to costs and tax. National insurance increase, lower threshold, minimum wage increases and business rate increases are creating a cocktail of costs for publicans.
Why pubs and bars don’t make any money from selling pints
Considering alcoholic drinks are most pubs and bars main selling point, it’s strange to say that pints don’t make pubs any money. In fact the profit of a pint is less than 10% when you factor in the wholesale price, beer gas, rent and utilities and tax, as well as the paying wage of the server. This doesn’t take into account any unexpected costs, debts, or long-term projected costs.
A lager distributer in London recently unveiled the cost breakdown of selling their £6 pint of house lager:
- Wholesale price = £1.36
- Wastage = 23p
- Beer gas = 9p
- Rent and Utilities cost = £1.36
- Staff costs = £1.76
- Tax VAT (before the most recent Government tax increase) = 57p
- Profit = 83p
For a beer priced above the national average (£4.70), at £6, this pub is making 13% profit. We understand that these figures will be differ from pub to pub, and very much depends upon location and business type. However it’s clear that pub selling pints at or below the average would be below 10%. Even at £6 per pint to garner 13% profit pubs and bars are struggling to finance new services, events, updates, improvements or entertainment.
The present average cost of pint is £4.70. BBPA have stated this number is said to soar to over £5 nationwide as pubs raise beer prices in order to survive and sustain their long-term business plans.
Pubs and Nightlife Need a Revolution
If you are a pub owner or regular pub goer, and agree with the following contingencies, then sign up to the Nightlife Revolution and have you say on how to boost British nightlife.
- Recognise Iconic Nightlife Venues as Cultural Institutions: Britian should reclassify historical pubs clubs and bars as protected institutions. Venues will be less vulnerable to gentrification by investors, developers and land owners; they will receive funding and grants to sustain themselves and projects, safeguarding British heritage.
- Stop the Death of Nightlife: The UK’s nightlife culture will be extinct by 2029 if venues keep closing at their current rate. The Nightlife Revolution promotes nightlife businesses and calls for financial aid.
- We Need Customers: 7 out of 10 nightclubs are below profitability. Pub profits are depleting with new government tax increases. The Nightlife Revolution wants higher footfall and feet on the dancefloor, without compromising the traditional British pub or nightclub. Members of the Nightlife Revolution pledge to support their local venue.
- Reinvention and Community: Clubs, bars and pubs are the perfect platform for the experiential market. Test experimental socialising activities and grassroots performers at your venue and see what works. The Nightlife Revolution is a platform for operators to share what works in order to benefit the sector.
The attitude toward British pubs and nightlife needs to change. These venues are essential to celebrations and grassroots music, as well as protecting the British way-of-life.
Join the nightlife revolution and sign up to have your say.
