Cost of living: Pubs face bleak future, boss warns

Pubs face a "bleak" future as costs climb and customers rein in their spending, a pub chain boss has warned.

Clive Watson said refurbishment plans were on hold and some kitchens may have to close at quiet times because of the rising price of food and energy.

The latest monthly inflation figure, published on Wednesday, was 10.7% in November, down from 11.1% in October.

It means prices are still rising, but the rate at which they are going up is slowing.

"I don't want to be sensationalist about it, but it is bleak," said Mr Watson, co-founder of City Pub Company, which runs 45 bars, with four in Wales.

"After Christmas, trade is always very quiet and, I think, it is going to be a long haul for operators who, let's face it, have had two years of Covid challenges.

"These are businesses who have been through a lot of pain already," he said, while speaking from the company's Newport bar, the Potters Pub.

"To go into the new year with all the high costs we have talked about, plus consumers feeling the pinch as well, I genuinely fear for a lot of pubs' long-term survival."

He said Christmas bookings were ahead of the same period in 2019, but spending per head was down as "the office credit card isn't as flexible as it has been in the past".

The combination of staff shortages, higher running costs and lower customer spending meant pubs were reluctant to invest in expanding their businesses.

"Why would I open a new pub in Cardiff for Newport if I am struggling to get the staff into existing pubs?" he said.

"We are curtailing our expansion and refurbishment [plans], and really just focusing on what we have got."

Businesses which supply the hospitality sector are also facing tough trading conditions.

The Tomos and Lilford Brewery, in Cowbridge, Vale of Glamorgan, employed seven people this time last year, but now managing director Rob Lilford is the only full-time staff member.

He said pubs were ordering less beer, and the costs of producing it had increased significantly this year.

"We faced a 30% rise in the price of the raw material, the grain that beer is made from," he said.

The conflict in Ukraine, as well as increased gas and electricity costs, are thought to have pushed prices higher.

"That was in January, and we are now expecting a higher rise than that this January - something in the region of 40 to 45%, and that is Ukraine-driven, as well as energy," he said.

Mr Lilford sells his beer to the Rising Sun in Abersychan, Torfaen, where owner and landlord Gerwyn Evans said it was "a scary time" to run a hospitality business.

"It's a rollercoaster," he added.

"When you hear on the news that the price of a pint has gone up 5p or 10p, that's the brewer's cost.

"That's not necessarily our costs for electric, gas, staff costs and wages.

"There are many other aspects to the price of a pint of beer and how much you can safely charge and still get people through the door."

Mr Evans, who is secretary of a group representing local landlords, said the trend was for pubs to open for only a few days a week.

"They are shortening their weeks, they are opening later in the day because the trade simply isn't there," he said.

The Rising Sun has diversified to offer specials such as a pie and pint night, quizzes and curry nights to entice new customers.

"We are quite fortunate that the locals do support the pub, but it's either use it or lose it," he said.

"So many pubs are closing, it's so sad that part of our national heritage and traditions are sadly going down, one by one."

Last month, Michelle Knight, who runs the Six Bells in Coity, Bridgend, told BBC Wales how she had halved draught beer and cider selections to keep costs down while running the pub's cooling system.

Dr Siwan Mitchelmore, a university lecturer at Bangor Business School, said pubs were "being squeezed from both ends".

"They are facing their customers directly and, as the cost of living has increased, it has also risen for businesses as well as their customers," she said.

"And we see that the number of people spending in these areas is falling because they are worrying more about heating their homes than about non-essential spending."