Pubs are facing a significant disparity in business rates compared to supermarkets, according to Wetherspoons’ CEO. Tim Martin, the founder, highlighted that pubs pay approximately 20 times more in business rates per pint of beer than supermarkets. This tax burden can contribute up to 28p to the cost of a £5 pint in pubs, in contrast to only about 1.5p for supermarkets, which benefit from lower overhead costs.
Martin pointed out that supermarkets have an advantage in selling cheaper beer due to not paying VAT on food sales, unlike pubs that are subject to a 20% standard VAT rate. This discrepancy allows supermarkets to subsidize the prices of alcoholic beverages, leading to a significant decline in pub beer sales over the years.
The imbalance in taxation, as Martin described it, not only affects businesses and high streets but also impacts the social environment, questioning where other than pubs individuals can find a temporary escape from family obligations.
In response to the challenges faced by the pub industry, Greene King proposed reforms to base business rates on profits rather than the current system. However, Martin expressed skepticism about this approach, suggesting that a profits-based analysis may not be the most effective solution.
Amidst the ongoing struggles in the pub sector, Wetherspoons stands out with plans to open approximately 30 new pubs in the coming year, marking its most significant expansion in a decade. This expansion initiative comes at a time when many pubs have had to shut down due to financial pressures and changing consumer behaviors.
Despite the industry’s overall decline, Wetherspoons remains resilient with 794 operating pubs, a slight decrease from its peak of 955 in 2015. The company’s commitment to expansion reflects a positive outlook amidst the broader challenges faced by the pub sector.
The Campaign for Real Ale (Camra) reported that nearly five pubs closed permanently every week in the first half of this year, with over 600 establishments remaining vacant long term. Since 2016, nearly 5,000 pubs have shut down, indicating a concerning trend in the industry’s landscape.
As efforts continue to support and revitalize the pub sector, initiatives like the “Your Pub Needs You” campaign by the Mirror aim to raise awareness and advocate for government intervention. The campaign calls for a fighting fund for pubs, recognition of community contributions by pubs, and support for local groups interested in purchasing and preserving their neighborhood pubs.