Heineken’s £39m move to open 62 closed UK pubs is a strong show of confidence in the sector, where it will create over 1000 jobs across the country. After an unstable 2023, during which more pubs closed than at the height of the Covid-19 pandemic, the pub sector is now seeing renewed optimism.[1] Between the beginning of last year and the end of 2024, Heineken will have reopened 156 pubs across the UK, reducing its number of closed pubs to pre-pandemic levels.
Other chains are also showing renewed optimism. Greene King announced its £40m investment in a new brewery in Bury St Edmunds, while Punch Pubs acquired 24 pubs from the Milton Three in a deal estimated at £15 million.
A combination of falling interest rates, increasing real disposable income and a summer of major sporting events is set to mark a long-awaited turning point for pubs. These factors are expected to drive renewed consumer spending and boost footfall, offering a much-needed reprieve for the industry.
Budgeting for success
The Government’s 2024 Spring Budget extended the 75 per cent discount on business rates for the hospitality sector, and is expected to save each business up to £110,000 over the course of the year. Furthermore, the extension of the alcohol duty freeze until February 2025 is pivotal in ensuring pubs do not face further rising costs, especially as increasing energy bills have placed severe pressure on the industry since the onset of the pandemic.
While the Chancellor’s freeze was a boon for the pub sector, more Government measures are still needed to counteract the challenges of the last four years. Larger businesses with a rateable value of more than £51,000 are subject to the non-domestic rating multiplier increasing in line with inflation to 54.6p a pound, nearly 5p more than for small businesses.
Reducing the VAT rates to 5 or 12.5 per cent, as was previously implemented during the pandemic, would prevent pubs from needing to increase food and drink prices to contend with the rising cost of living, and ensure hospitality remains affordable for customers
Power to the pub
Despite rising prices, with the average cost of a pint expected to grow to £5.22 this autumn,[2] real disposable income for consumers is also expected to increase. Indeed, according to NIESR’s Winter 2024 UK Economic Outlook, real household disposable income is projected to expand by around two per cent this financial year.[3]
The Early May Bank Holiday just gone provided a glimpse into why such optimism from pub chains may be well-founded. Despite mixed weather across the long weekend, pubs saw their most successful day of the year up till then on May 4, finishing 12.3 and 2.1 per cent ahead of the same day in 2019 and 2023, respectively.[4] The pub remains a popular pastime for the Brit public – the latest GO Technology report found that nearly two-thirds of adults believe pubs play an essential role in their community and social life, with almost three-quarters happy to support the industry with regular visits.[5] In fact, consumers are demonstrating their commitmentnearly half of adults visiting an on-trade venue at least once a week.
A sporting summer
Summer marks the most lucrative period of the year for pubs, with long daylight hours, warm weather, and increased tourism. This summer in particular will be a bumper year for sports, with the Euros in Germany and the Olympics in Paris earmarked to increase footfall. A quarter of adults go to the pub to watch sport once a week,[6] and this rose to around half of adults during the Euros this summer.[7] The British public were estimated to drink more than 600 million pints across the 33 days of the tournament, spending more than £2.4bn, a welcome boost to the economy.[8] The Government also supported this, mandating pubs extending their opening hours an extra two hours when England made the semi-finals, bringing in more customers for longer.
Our very own Pilchard Inn is one such pub that has longer opening hours this summer, allowing visitors to enjoy our outdoor sea view late into the evening seven days a week. Located on the shores of Burgh Island, Devon’s oldest smugglers’ pub has a rich history and wonderfully wild atmosphere, dating back to 1336.
With summer comes a wave of optimism for the future of Britain’s pubs. Those that have survived thus far are well-positioned for success, taking advantage of Government policies, consumer demand and strategic investments to signify a turning point for the pub industry. As pubs capitalise on their enduring demand and once again look to fill their beer gardens in the coming sunshine, our treasured establishments seem set to reclaim their vital role as the social cornerstone of the UK.
[1] https://www.ft.com/content/91b9419d-e3d4-4693-ac88-bf34730c6bdc
[2] https://startups.co.uk/news/average-pint-cost-fiver/
[3] https://www.niesr.ac.uk/blog/improving-uk-living-standards
[4] https://www.morningadvertiser.co.uk/Article/2024/05/07/How-busy-were-pubs-on-May-Day-bank-holiday-2024
[5] https://www.morningadvertiser.co.uk/Article/2024/03/13/Consumers-call-for-more-support-for-hospitality-firms
[6] https://www.morningadvertiser.co.uk/Article/2024/03/26/consumer-trends-for-pubs-for-summer-2024
[7] https://sltn.co.uk/2024/04/03/star-pubs-sets-up-its-licensees-for-2024s-summer-of-sport/
[8] https://www.thedrinksbusiness.com/2024/05/brits-to-spend-2-4-billion-on-beer-during-euros-2024-tournament/
