Young pub boss: Budget changes will be ‘extremely difficult’ for small operators

Young’s & Co chief executive Simon Dodd warned that tax and wage rises will weigh hardest on smaller hospitality businesses after the pub group revealed an £11m budget hit.

Dodd told This is Money that the hospitality sector urgently needs substantial business rates reform to help much of the industry “balance the books”.

It echoes warnings from Hospitality UK and Fuller’s chairman Michael Turner, who said Rachel Reeves’ policy changes would send small operators “up the wall”.

Dodd said: “If you own a pub and you are the sole operator it will be extremely difficult.”

‘We are fortunate in that we are over 80 per cent wholly owned, we have a strong balance sheet, we have scale and efficiencies, and we trade in thriving towns and cities.

‘If you are a smaller company and an entrepreneur, the outlook is difficult for you. For the larger ones, this is how we mitigate the cost.’

It came as Young’s revealed on Thursday that the Autumn Budget would cost the group an extra £11m as a result of higher employers’ national insurance contributions and an increase in the national living wage.

Expanding on plans to “mitigate these headwinds without passing the entire cost on to our loyal customers”, Dodd said Young’s price increases will likely reach “around 2 to 3 per cent” in the next financial year.

Young’s revenue soared 27.2 per cent to £250m in the 26 weeks to September 30, boosting operating profit from £7.1m to £38.1m sterling.

This follows first half cost savings of around £6.1m thanks to the integration of recent acquisition City Pub Group, while further savings are expected to be realized over the next year.

Dodd said Young’s food costs are also “strangled from last year,” while the group has locked in energy costs for next year.

But while the cost hurdles that have plagued the sector for the past three years have begun to ease, Dodd believes business rates reform is necessary.

He said: ‘My understanding is that we are eight to ten months away from understanding what the business rates reform will be.

“The key for us is that it must affect the entire hospitality industry, because if it only affects business owners and people who own a pub, the true benefit will not be obtained.”

‘It has to be something that encompasses all of leisure, hospitality and retail.

‘We just want justice. Bricks and mortar have weighed on corporate interest rates for many years, and I truly believe reform will help many of us balance the books.’

Young people are optimistic about the Christmas holidays

Dodd also told This is Money that Young’s is “seeing a real boost in business” heading into the busy holiday season, with sales up 9.2 percent over the past three weeks, thanks to a boost from the merger of rugby Autumn Internationals.

He added that the group was “confident” ahead of Christmas, with bookings for the seven-week trading period up 10 per cent year-on-year and consumers showing “they are willing to pay a little more for premium products”.

Dodd said: “There is still a lot of positivity in the sector and people still love the great British pub.”

‘As long as you give them a reason to visit and when they go out, you give them a good time, I think people always come.

“We are optimistic about the future and what is under our control is looking good.”