Shepherd Neame announced this morning that it would be forced to raise prices at its 290 pubs due to cost pressures from last October’s budget.
The family business follows a host of other hospitality companies in raising prices, with the average price of a pint set to go up by six to eight per cent, according to UK Hospitality.
With the national living wage set to rise 6.7 per cent and national insurance contributions (NICs) set to rise 1.2 per cent, pubs face millions in extra costs from April.
The lower threshold for NICs, which now pulls the wages of part-time workers into the tax bracket, will also hit the labour-intensive and part-time-reliant hospitality sector harder than others.
“These new cost pressures, which will of course also feed up to pubs via increased supply chain costs, will inevitably mean higher prices at the bar and, sadly, will very likely affect staffing levels in pubs where this is the only remaining way to ensure business survival,” Paul Crossman, chair of the Campaign for Pubs, said after the budget.
Another 10 pence on the pint
Most businesses have said they will increase the price of drinks by 10p. This includes Fuller’s, Marston’s and All Bar One owner Mitchells & Butlers.
Mitchells, which called higher wage expenses “by far the most significant increase” in its cost base, faces a cost increase of £23m per year due to higher NICs.
Wetherspoons, which faces a cost hike of £1.2m per week, said it will increase the prices of popular drinks by 15p, while meal deals will go up by 30p.
“Wetherspoons has always tried to remain as competitive as possible. We hope that our prices will still be reasonable in spite of these increases,” Pub boss Sir Tim Martin said.
Some will increase prices even further: Simon Dodd, chief executive of Young’s, said the chain plans to hike its prices by 20p.
Young’s faces a cost hike of £11m, equivalent to a fifth of its pre-tax profit last year.
The higher wage costs are directly leading to inflation because few pubs have the capacity to absorb higher costs after the effects of lockdowns, the energy price spike of 2022 and the subsequent cost-of-living crisis.
But higher prices are a tough pill to swallow for consumers, too.
“There is no capacity to pass the costs onto customers,” Kate Nicholls, Chief Executive of UKHospitality said. “Customers are at the end of their ability to pay more.”
At the Budget last October, ministers trumpeted policy changes that they claimed would take 1p off the price of a pint.