Hard-pressed punters could be set for another blow in October as a new law looks set to push up the price of a pint across London.
Sticky inflation and supply pressures facing pub owners have seen the cost of a beer or larger surge over the past year, with the average boozer now charging £6.75.
But this could rise to a steep £7.15 across London later in the year.
The average price of a pint could jump after legislation impacting hospitality staff tips is enacted this autumn, according to a new study by hospitality technology brand Three Rocks®,
Under the new rules, known as the Employment Allocation of Tips Act, employers cannot hold back service charges from their staff. This is to ensure staff in hospitality and other roles receive all of the tips they have earned.
These new measures will apply to England, Scotland and Wales once parliamentary approval has been secured.
However, a new research report, based on the feedback from 2,500 hospitality businesses, has suggested the industry could respond to the new law by putting a service charge on drinks.
Overall 74 per cent of the businesses surveyed said they would have to raise prices to cover the change.
Some 22 per cent of these said they already charge a tip, while 52 per cent said they plan to add a charge of up to 10 per cent for the service.
If enacted, the changes would push the current average price of a pint across the UK from £4.75 today to over £5 for the first time.
Due to the new legislation, nearly a fifth of hospitality businesses, equivalent to 25,740 operators across the UK, could see costs increase by between £60,000 and £360,000 a year.
Just 28 per cent of hospitality companies across the UK are currently compliant with the new act, equating to more than 90,000 businesses which will now need to change the way in which they operate.
Government officials said the move would put £200m more into workers’ pockets – but restaurants and the wider hospitality sector fear it could add to costs amid a period of high inflation.
“No hospitality business will be able to benefit from tips’
The shake-up in rules comes amid a challenging period for hospitality, which has suffered due to high inflation and wage stagnation, leaving customers with less cash to burn at the bar.
Scott Muncaster, founder and managing director of Three Rocks, said the industry has been “under immense pressure in the last few years”.
“Beginning with the pandemic, then one of the biggest labour and skills shortages in decades, and now the cost-of-living crisis, operators need all the help they can get.”
He added: “Tipping has long been a sticking point for customers, staff and businesses, with many not knowing what to expect, what to give, or how to spread tips out among employees.
“It’s encouraging that customers are supporting the industry, however once the Employment (Allocation of Tips) Act 2023 comes into force, no hospitality business will be able to benefit from tips.”
He said: “[Spending is up] on last year but overall still below pre covid, the whole industry has changed. People’s habits and budgets have changed a lot in just a few years and with young people drinking less and less it’s really a perfect storm for stagnation in the industry.”
Price of a pint already high
While the average price of a pint around London could rise to above £7, some boozers are already charging well above that rate.
According to a report in Time Out, a pint of Guinness at the Trafalgar Tavern in Greenwich is £7.95, and if you want a Brixton Coldharbour Lager at the same pub it will set customers back £8.80.
However, for punters on the hunt for a bargain City A.M. recommends Turner’s Old Star in Wapping or The Asparagus in Battersea for a pint costing below £6.