Half of pubs will need more than five years to repay pandemic debts

16 July 2021 by
Half of pubs will need more than five years to repay pandemic debts

Half of pub businesses across the UK have said they will need more than five years to repay debts accrued due to the coronavirus pandemic.

A survey by the British Institute of Innkeeping (BII) found that, despite reopening, pubs are still under threat, having seen debts build up over the last 17 months, and are now facing rising costs across all areas of their businesses, from staffing to increased costs for utilities, food and drink supplies.

Of the respondents, 55% had accrued pandemic-specific debts of over £20,000 per site, with more than one in four having debts of up to £80,000.

Only 42% of respondents were confident of returning to profit once all restrictions are lifted, with increased costs and debt repayments impacting their businesses. After 19 July 72% will be facing full rent payments.

Staffing remained a huge challenge for pubs with nearly half struggling to recruit the staff they need. Of the operators surveyed, 72% have had to raise wages to attract and retain front of house staff, of which 40% have had to increase wages by more than 10%. Similarly, 57% have had to raise wages for back of house and kitchen staff, with 48% having to increase wages by more than 10%.

The survey also found that 43% had seen a rise in the cost of food, with 59% reporting increases of between 11% and 50%. In addition, 41% said they had seen a rise in the cost of drinks, with 72% reporting a rise of up to 10%.

Utilities costs have also risen, with 30% reporting an increase from last year. Half of these saw increases up to 25%, but a fifth saw rises of up to 50%. In addition, 10% had either been refused supply or had to pay up front for their gas, electric or water services.

Steven Alton, BII chief executive, said that pubs in England urgently needed an extension of the business rates holiday to April 2022 to match Wales and Scotland, as well as an extended VAT reduction, an immediate cut to duty on draught products specifically for pubs and an urgent reform of the entire rates system.

"This support is an investment in the future of not only these vibrant and vital community spaces, but also in the economic recovery of the UK," he said.

Photo: IsabellaO/Shutterstock.com

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