Young’s pubs boss: Budget modifications shall be ‘extraordinarily powerful’ for small operators

Young’s & Co chief executive Simon Dodd has warned tax hikes and wage increases will weigh heaviest on the smallest hospitality firms after the pub group revealed a £11million Budget hit.

Dodd told This is Money the hospitality sector urgently requires substantial business rates reform to help much of the industry ‘balance the books’.

It echoes warnings from Hospitality UK and Fuller’s chair Michael Turner who said Rachel Reeves’ policy changes would send small operators ‘to the wall’.

Battered by the Budget: Young’s chief executive Simon Dodd revealed an £11m hit as a result of changes made by the Chancellor Rachel Reeves in the Autumn Budget 

Dodd said: ‘If you’ve got one pub and you’re a sole operator, it’s going to be extremely tough.

‘We’re fortunate in that we’re over 80 per cent freehold, we’ve got a strong balance sheet, we’ve got scale and efficiencies, and we trade in affluent towns and cities.

‘If you’re a smaller business and an entrepreneur, it is a tough landscape for you. For the bigger boys, it’s just how we mitigate the cost.’

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

Expanding on plans to ‘mitigate these headwinds without passing on all the cost to our loyal customers’, Dodd said Young’s price hikes will likely come in at ‘around 2 to 3 per cent’ in the next financial year.

Young’s revenues rocketed 27.2 per cent to £250million in the 26 weeks to 30 September, driving operating profit from £7.1million to £38.1million.

It follows first half cost savings of around £6.1million from the integration of recent acquisition City Pub Group, while further savings are expected to be made over the next year.

Dodd said Young’s food costs are also ‘running flat on last year’, while the group has fixed energy costs for the year ahead.

But while the cost headwinds that have battered the sector over the last three years have started to recede, Dodd believes business rates reform is needed.

He said: ‘I understand we’re about eight to 10 months away from understanding what the business rates reform will be.

‘The key for us is it needs to affect the whole of hospitality, because if it just affects entrepreneurs and people that have one pub, you’re not going to get the true benefit.

‘It needs to be something that’s all encompassing for leisure and hospitality and retail.

‘We just want fairness. Bricks and mortar have carried the weight on business rates for many years, and I really believe reform will help many of us balance the books.’

Young’s optimistic ahead of festive season

Dodd also told This is Money Young’s is ‘seeing real momentum in the business’ heading into the busy festive season, with sales up 9.2 per cent over the last three weeks – thanks to a boost from the rugby union 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 prepared to pay a bit more for premium products’.

Dodd said: ‘There’s 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 come out, you give them a great time, I think people always come.

‘We’re optimistic about the future and what’s in our control is looking good.’