Britain’s oldest brewer moves from profit to loss as Market Recovery Monitor says more government support is needed in order to prevent a wave of permanent closures.
In a sign of the shift in commercial influence from city centre to the suburbs, Shepherd Neame, Britain’s oldest brewer, has issued a stark warning as to the viability of many of its pubs in central London at the same time as confirming a brighter future for locals in residential areas.
Highlighting the adoption of home working and the absence of international tourists brought about by the pandemic as key influences, the brewer, which operates 319 pubs in London and across the south east, confirmed a loss of £2.9m for the year to June 27 from a 15 percent drop in sales to £123.6m. The figures compared with a pre-tax profit of £11.4m a year earlier.
Jonathan Neame, chief executive of the group which was founded in 1698, confirmed that it was likely that many of its city centre pubs would “close for good” as a result of the changes brought about by the pandemic and urged the government to extend the business rates holiday for the hospitality sector and introduce permanent changes to the VAT rate for food and accommodation. The negative news was echoed by the findings of the latest Market Recovery Monitor from CGA which showed that close to a third of Britain’s licensed premises remained shut ahead of lockdown, a sign that the sector may be substantially reduced after the end of England’s four-week enforced closure.
The report claims that 69.9 percent of Britain’s total licensed premises were trading at the end of October 2020. This represents a fall of more than ten percentage points on sites open a month earlier and is equivalent to nearly 12,000 sites closing their doors by the end of October.
In mid-October, a survey co-ordinated by CGA found that members of three leading trade groups expected 43 percent of closed outlets would not re-open, and that they would have to close another 6 percent by the end of the month.
The Market Recovery Monitor shows that many of October’s closures were triggered by the government’s three-tier system of restrictions in England, which forced pubs and bars in ‘Very High’ alert areas to shut unless they were serving substantial meals. Just over half (52.8 percent) of licensed premises in Tier 3 areas were open at the end of October. There were also widespread closures in Wales as a result of the ‘firebreak’ lockdown, and across the central belt of Scotland.
Business unit director for food and retail at CGA, Karl Chessell stated: “Hospitality has been steadily reopening since the end of the first national lockdown, and nearly 20,000 sites opened their doors again over August and September – but October saw an abrupt end to the recovery.”
He added: “It’s very clear from this report that every new restriction damages businesses’ ability to trade. With England now entering a second lockdown, we are unlikely to see Britain’s licensed premises return to the levels seen in the summer – let alone pre-pandemic – for a long time.
“Financially robust companies should be able to sustain themselves through the lockdown, and the extension of the government’s furloughing scheme will undoubtedly save some businesses. But much more support is going to be needed to prevent a wave of permanent closures over the winter.”
The Market Recovery Monitor shines a light on the particularly heavy impact of the tiered system and 10pm curfew on drinking-out venues such as high street pubs and bars. Only 63.1 percent of drink-led sites were open at the end of October, compared to 79.9 percent of food-led operators and 81.3 percent of casual dining restaurants.
The report also emphasises the stress of restrictions on small businesses. Fewer than two thirds (63.1 percent) of independent sites were open at the end of October – compared to 81.8 percent of managed venues.