Red tape could ‘derail’ pub sector potential

By Melodie Michel

- Last updated on GMT

The sector's growing potential could be hampered by legislative costs
The sector's growing potential could be hampered by legislative costs

Related tags Cent High street

The Association of Licensed Multiple Retailers (ALMR) has warned that despite growing economic potential, the pub and bar industry could suffer from the continued hike in legislation costs.

The ALMR’s latest Benchmarking Report showed continued improvement in key performance indicators (KPI), with capex sustained at 3 per cent of turnover, long-term average costs steady at 48 per cent of turnover and like-for-like sales up 5 per cent (10 per cent for food-led high street establishments).

Additionally, eating and drinking out turnover is up 3.5 per cent, generating 7 per cent of net new jobs.

Increased legislative costs

However, the report pointed out that sustained increases on legislative costs could hamper those positive results, especially for late-night operators.

ALMR chief executive Kate Nicholls said:  “While it is good news that overall operating costs are under control, those cost lines directly linked to legislation continue to climb and reached a record high at 5.5 per cent of turnover.

“Premises costs, driven by business rates, are also up significantly at 6.5 per cent of turnover. As a result, margins have tightened and business profitability is down 2 per cent. This has a very real price in terms of our continued ability to invest.” 

She emphasised the potential of a sector as a responsible employer and community stakeholder, adding that the licensed industry is ‘the real engine of growth’, but warned: “We need to be freed from red tape and punitive taxes to deliver that in full.”

Campaign support

The report, which benchmarks operating costs, business performance and market trends, will be used to support ALMR campaigns to promote a free, fair and flexible property market and to reduce unnecessary red tape costs.

The association is asking for a reform of business rates, revisions to the Code of Practice on Business Leasing and the full implementation of the red tape challenge. 

“There is a strong warning to government in all of this. Those sectors delivering the greatest growth and investment – food-led, high street operators – are also those reporting the greatest pressure from legislative costs and business rates. 

“Whilst the sector is well placed for steady growth, it remains volatile and highly responsive to external pressures. Get it right and we will be able to capitalise on these positive indicators. Get it wrong and investment in jobs, outlets, high streets and communities could all too easily suffer,” Nicholls concluded. 

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