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North bars and restaurants in ‘unbelievable place’ as economic headwinds grow

Pint of beer on a bar.
Bars are feeling the heat. Image: Shutterstock.

A north bar owner and Night Time Industries Association (NTIA) Scotland vice chairman is highlighting the “grim” situation faced by hospitality businesses as an economic hurricane batters the sector.

NTIA Scotland vice chairman Gavin Stevenson, who is also managing director of the Mor-Rioghain Group which owns Gellions, The Highlander, Monty’s and Upstairs Bar in Inverness, says the industry has not faced such a cascade of challenges in his “living memory.

Mr Stevenson’s comments come as a worrying survey from the Scottish Licensed Trade Association (SLTA) is landing with a heavy thump on Holyrood ministers’ desks.

The Gellions pub in Inverness.
Mor-Rioghain Group owns The Gellions in Inverness. Image: Andrew Smith..

The SLTA is raising major concerns Scotland’s pubs and bars face “a tidal wave of economic challenges” as the sector calls for urgent, increased government support to protect businesses.

The post-Christmas/New Year survey, covers restaurants, bars and hotels, and contains insights into a wave of unprecedented pressures with huge increases in the cost of energy, rates and post-Brexit challenges in recruitment.

Three out of five outlets operating restricted hours

The research says as the industry heads into the second month of 2023, three out of five outlets are operating restricted hours with rising costs, staff shortages and “enormous increases” in energy prices.

Meanwhile, 45% of respondents reported energy increases of more than 250% – sentiments echoed by the NTIA Scotland vice chairman.

Mr Stevenson said: “It is a pretty grim situation all round really. The sector has not faced these sorts of challenges in my living memory. A lot of that is electricity price-driven, the cost of utilities has trebled.

“For the vast majority of operators we have seen trade decline (even) without the cost-of-living crisis. If there is not a critical mass of people visiting town and city centres then those currently doing OK will start to struggle.”

Energy meter with pound coins in foreground.
Cost of utilities has trebled. Image: Shutterstock.

The SLTA noted its survey was based on research supported by major food and drink chains as well as independent pubs, bars and hotels in Scotland’s hospitality sector.

Other spectres at the hospitality feast include the impact of Scotland’s Deposit Return Scheme (DRS) and the proposed restrictions on alcohol advertising sponsorship which could impact many everyday aspects of pub life – from sponsoring the dominos team to serving local beers in branded glasses – a view Mr Stevenson shares.

Scotland should be world-beating when to comes to food and drink products

Gavin Stevenson

He said: “This (alcohol marketing proposal) is another example of what seems to be a biased agenda and certain special interest groups. Whether that is a local distillery sponsoring a Highland Games, whether that is a whisky festival, small brewery, gin distillery.

“Scotland should be world-beating when to comes to food and drink products.

“It is just unbelievable the place we find ourselves in.”

Colin Wilkinson, managing director of the Scottish Licensed Trade Association
Scottish Licensed Trade Association MD Colin Wilkinson,

SLTA managing director Colin Wilkinson warned the association had previously said it would not be economically viable for many outlets to stay open and that this was “now coming to fruition” with the subsequent knock-on effect on Scotland’s food and drink sector as well as the supply chain.

Mr Wilkinson said: “Christmas/New Year 2022 was the first time since 2019 our pubs and bars were fully open without Covid restrictions, but the feedback in our survey shows half of outlets were still in decline versus the last ‘normal’ festive season trading period.

“Adding in increases in rates, operating costs, staff shortages and uncertainty on energy, we urgently call on local and national governments to help our sector and the associated jobs in the wholesaling, brewing/distilling and food-producing sectors.”

‘Never-ending stream of consultations’

Mr Stevenson added: “We are in the biggest cost-of-living crisis on record.

“Operators are having to work excessively long hours and we have government complicating matters further with a never-ending stream of consultations which are frankly anti-business.

“The deposit return scheme and alcohol consultation are great examples of that.”

A spokesperson for the Scottish Government said it was “well aware of the enormous pressures currently facing businesses”.

In a statement, the spokesperson said: “Ministers are taking decisive steps to support businesses during this crisis.

“The Scottish Budget 2023-24 will freeze the poundage, delivering the lowest non-domestic rates poundage in the UK for the fifth year in a row, saving ratepayers an estimated £308 million compared to an inflationary increase.

“It will also provide a package of reliefs worth an estimated £744m, including the UK’s most generous Small Business Bonus Scheme and a Revaluation Transitional Relief which will protect those seeing the most significant increases in their rateable values as a result of revaluation.

“Ministers have also increased support for smaller and medium-sized businesses by expanding the capacity of the Business Energy Scotland advice service and establishing a joint taskforce with COSLA, regulators and businesses considering the differing impacts of regulation.

“The Scottish Government has also established an industry leadership group with the tourism and hospitality sector to best understand their needs.

“The significant cut by the UK Government in support for businesses with their energy costs beyond March is very concerning.

“Along with businesses, Ministers have also repeatedly called on the UK Government to take action, including through a VAT reduction on energy bills and an extension of the Coronavirus Business Interruption Loan Scheme and other loans.”

Summary of key challenges from SLTA survey

  • 50% outlets were down Christmas/New Year 2022 versus the last ‘normal’ festive season
  • Costs are rising massively.
  • 45% are facing energy rises of over 250%
  • 40% of outlets are facing added costs via rateable value increases
  • 60% of outlets are closing early or for full days and won’t be operating to their full opening hours in Q1
  • 40% of outlets had to restrict opening as they still face post Brexit staffing issues
  • Outlets face further legislative challenges on Scotland’s deposit return scheme (DRS) and proposed changes to alcohol advertising and promotion
  • Government support is urgently needed, with 76% of outlets requesting Government support to survive in 2023 – this is a slight decrease from 86% in September

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