Things rarely go well for the hospitality sector when the economy takes a downturn. If you own a pub or brewery, you know all too well how difficult economic conditions can harm your business. And unfortunately, the UK isn’t experiencing the best economy right now. Things could get worse for your business next spring, thanks to higher energy prices.
The government currently supports pubs and breweries with an energy bill relief scheme that is set to expire on 31 March 2023. What will that mean for you and your business? According to a recent economic report from Frontier Economics, higher energy prices could easily set you up for a loss of 20% or more.
If you’ve had any thoughts of selling before your brewery or pub loses any more value, we urge you to make a decision soon. We are in the business of buying commercial properties; we are interested in taking a look at yours. While you are thinking it over, let us talk more about the pending energy issue.
Energy Takes a Larger Cut
Frontier Economics says that energy costs are now the biggest threat to pub and brewery viability. That makes sense, given the fact that energy costs take a larger cut from a business owner’s budget compared to other operational expenses. That cut is even larger during times of high inflation.
According to the Frontier Economics report, pub and brewery owners have been taking steps all along to mitigate the financial costs of ongoing inflation. They have done everything from reducing operating hours to altering their menus. There aren’t many other things they can do to cut costs.
Energy As a Percentage of Turnover
Unfortunately, the UK is in the throes of an energy crisis. Prior to its onset, energy consumed roughly 4% of the average pub or brewery’s turnover. That number is now closer to 10% – even with government support. Should that support be allowed to expire next year as expected, pub and brewery owners could be spending as much is 21% of their turnover on energy alone.
It gets worse. Frontier Economics estimates the average pub profit prior to the energy crisis at 9% (£36k). If their estimates are correct, the average pub will lose 18% (£72k) once government support for energy expires.
It Is Decision Time
Being the bearer of bad news is not something we relish. Nonetheless, it is decision time for pub and brewery owners across the UK. The nation is in tough economic shape. Inflation is unforgiving, and things are only going to get worse once energy subsidies come to an end.
We buy commercial properties of all sorts in the UK. We are very confident in the post-recession potential of UK pubs and breweries. That’s why we are willing to invest in them even while things look bleak. We might be interested in your pub or brewery as well.
We Value Your Property
Your commercial property has value to us. We have the ability to withstand higher energy prices and other inflationary pressures. If you don’t, which is to say that higher energy costs could actually put you out of business, we encourage you to consider selling now – before you take any more losses.
All of us wish that economic conditions in the UK were better. But all the wishing and the world doesn’t protect against inflation, high energy costs, etc. Are you prepared to pay more for energy come April 2023? If not, consider selling your pub or brewery. We are ready to buy. Reach out and let us talk about your property.
If you have a pub to sell, send your details today for a free, no obligation appraisal.