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\t\tIndependent pubs are struggling more than chains\t<\/p>\n
2025 has been a year of diverging fortunes for pubs. <\/p>\n
Listed pub chains \u2013 particularly those with a strong presence in London \u2013 are reporting record sales, buoyed by higher consumer spending and increased footfall as workers return to their offices. <\/p>\n
Independent pubs, meanwhile, are closing at the fastest rate this century, blaming unfriendly government tax policy and high taxes. <\/p>\n
But it is not for lack of customers; rather, rising\u00a0<\/strong>operating costs,\u00a0<\/strong>card processing fees,\u00a0<\/strong>business rates,\u00a0<\/strong>and\u00a0<\/strong>inflation-linked expenses have been near-impossible to stomach. <\/p>\n Some pubs and small business have gone as far as to ban Labour MPs from their venues in protest of policy changes. <\/p>\n \t\tWhy are pubs under pressure?<\/p>\n The data is stark: Independent pubs face extinction by 2035<\/a> if closures continue at their current rate. <\/p>\n Pubs have three main costs: energy, labour and business rates. All three of this have risen in the last four years and two are set to continue to rise going forward. <\/p>\n Energy costs jumped after the Russian invasion of Ukraine and have yet to return to pre-2022 levels, remaining around 70 per cent higher in 2025 than in 2022. <\/p>\n Labour costs have been affected by the change the employer\u2019s national insurance in last year\u2019s Budget, which effectively added \u00a32,500 to the cost of employing a full-time member of staff. The minimum wage has continued to rise, although the knock-on effect of higher consumer spending somewhat mitigates the effect on businesses\u2019 bottom lines.<\/p>\n Business rates are set to rise next year with inflation, on average adding \u00a31,400 to a businesses\u2019 annual bill. In 2028, the rise will be \u00a37,000. <\/p>\n The chief executive of UK Hospitality, the industry\u2019s lobby body, has described the sector as being \u201ctaxed out\u2026 and all too often the most vulnerable businesses are small businesses.\u201d<\/p>\n Why are local pubs harder hit than chains?<\/p>\n Chains benefit from a few advantages versus local pubs. The first, unsurprisingly, is economics of scale, giving chains more buying power to negotiate prices, more capital to invest and greater variation in geography. <\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tLandlords bar Labour MPs from pubs as hospitality backlash mounts<\/a><\/p>\n The latter point is important due to the spending patterns of urban and rural consumers during an economically challenging time: In wealthy areas like London and Edinburgh, consumers spend roughly \u00a31 in every \u00a34 on dining out but in areas like Bradford and Stoke, it\u2019s closer to \u00a31 in \u00a310<\/a>.<\/p>\n With no variation to smooth the gap between over and underperforming venues \u2013 as well as the higher difficulty of moving or selling up underperforming pubs \u2013 local pubs are much more likely to sell up and not relocate<\/a> than chains. <\/p>\n Changes to business rates are set to exacerbate the issue by hurting independent small pub and shop owners more than multi-site operators. <\/p>\n Small business relief is set to be replaced by a generally applicable retail, leisure and hospitality (RHL) relief, a move which will see small venue bills rocket and chains\u2019 bills marginally rise, according to Colliers. <\/p>\n The business rates problem<\/p>\n John Webber, head of business rates at Collliers, said the independent pubs will \u201cmiss out\u201d. <\/p>\n \u201cThe loss of relief\u2026 is in no way compensated for by the lower RHL multiplier. The level just didn\u2019t go low enough!\u201d<\/p>\n \u201cThe government does not appear to be being straight with business \u2013 although the cap on bills in year one is significant, this is hardly worth anything for a pub business faced with a 75 per cent increase over three years.<\/p>\n \u201cThe government boasted about levelling up the high street. But a version of levelling up the sector by getting small businesses to pay the same as big businesses is not what we thought they had in mind! \u201c<\/p>\n Some analysts suggest that pubs will respond by changing to create a new normal, with a push towards higher-margin products like accommodation and food. <\/p>\n The question is whether spending will rise enough in the coming years to pay for the price hikes, and what will happen to the pubs whose margins become unsustainable or who cannot shift to the \u2018new normal\u2019 in hospitality.<\/p>\n \t\t\t\t\tRead more<\/p>\n