Shepherd Neame has said it has slashed staff hours and hiked prices as Britain’s oldest brewer is ‘beset with high costs.’
The group, which runs 285 pubs across Kent and the South East of England, said the industry has been hit with ‘disproportionate’ tax hikes over the last couple of years.
Chief executive Jonathan Neame said the brewer had ‘successfully reduced hours of operation and flexed our labour to suit demand,’ and had been forced to raise prices ‘whilst remaining conscious of the need to maintain value for money.’
He added: ‘Everyone in hospitality has battled with the significant increases in the cost of labour in the last year.’
But performance ‘remains encouraging’ despite the ‘cost and operational challenges’ even as Shepherd Neame sold fewer pints as consumers turn their backs on traditional ale.
Shepherd Neame boss has said the brewer has cut opening hours to battle higher costs
The brewer has had to grapple with higher costs, including increases to the minimum wage, which is set to go up again next month.
There are also fears over steeper energy bills and weaker consumer confidence in the coming months following attacks in the Middle East.
Neame said that ‘some caution is naturally warranted given the situation in the Middle East’ but said it was too early to predict what the impact would be.
Sales slumped slightly to £85million over the 26 weeks to 27 December, compared to £84.7million in the same period a year before.
It comes despite ‘strong’ trading across its pubs, including an ‘exceptional performance’ at its London venues, where sales rose 11.2 per cent.
But a fall in beer sales has hit the business as the volume of beer sold fell 6.6 per cent.
‘This division continues to find conditions challenging – particularly with national customers – with volumes in decline, costs increasing, and a shift away from traditional ale categories to stout and premium lager categories,’ it said.
Neame said the sector had been hit with a ‘great shock’ when the Chancellor initially announced plans to increase business rates at last year’s Budget.
But he acknowledged a later U-turn would help ‘to provide additional support and much-needed relief to our licensees.’
‘The sector wants to pay its fair share of taxes, but the increases of the last few years have been disproportionate,’ Neame added.
And he also welcomed a review into the way business rates bills are calculated – calling the current methodology ‘inherently unfair.’
The dismay over the Government’s handling of business rates resulted in leading hotel groups, including Holiday Inn, Hilton and Butlins, urging the Chancellor to expand the tax relief for pubs to the wider hospitality industry.
It comes as one of Britain’s biggest pub chains, Greene King, is considering selling 150 of its pubs in a property shake-up.
It also plans to convert 150 ‘managed’ pubs into ‘tenanted’ pubs. It means Greene King will no longer own and operate a venue but instead rent the building and its fixtures to a landlord.
Greene King boss Nick Mackenzie, said the plan was a ‘strategic reaction’ to the ‘changing operating environment’.
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