The ALMR’s 8th Survey shows business confidence and performance KPIs all improving:
- Eating and drinking out turnover up 3.5% and generating 7% of net new jobs
- Long term average costs steady at 48% of turnover
- Consolidation of last year’s record investment – capex sustained at 3% of turnover
- Positive like for likes of 5% – food led high street seeing double that growth
- Potential jeopardised by further unsustainable legislative costs – margins squeezed & Late Night operators struggle in new regulatory environment
Hampered by increasing legislative costs
Britain’s pubs and bars have consolidated their recovery – with food led, high street operators leading the way – but their ability to deliver ever greater levels of investment, growth and jobs is hampered by increasing legislative costs. That’s the key message from the industry’s authoritative Benchmarking Report, launched by the ALMR, in association with Barclays.
The Report – which benchmarks operating costs, business performance and market trends – shows a second year of capital investment, cost control and positive growth. It reveals average capex of 3% of turnover and like for like sales increasing by 5% with food led, high street operators delivering double the sector average.
The real engine of growth
Speaking at the publication of the results, ALMR Chief Executive, Kate Nicholls, said:
“Taken as a whole these findings reinforce our messages to government – we are a responsible employer and community stakeholder, well placed to generate jobs, invest in our high streets and play a full part in addressing the challenges we face collectively as the economy grows its way out of recession.
“These findings demonstrate in spades that we are the real engine of growth and the best barometer of business and consumer confidence. We have the potential; we need to be freed from red tape and punitive taxes to deliver that in full.”
Cost lines linked to legislation climb
The Report does, however, sound a note of caution about factors which could yet derail this potential. While overall costs and commercial rents have stabilised – at long term averages of 48% and 11% of turnover respectively – there are significant and sustained increases year on year in certain cost lines.
Nicholls continued:
“While it is good news that overall operating costs are under control, those cost lines directly linked to legislation continue to climb and reached a record high at 5.5% of turnover. Premises costs, driven by business rates, are also up significantly at 6.5% of turnover. As a result, margins have tightened and business profitability is down 2%. This has a very real price in terms of our continued ability to invest.”
These two findings will be used to reinforce ALMR campaigns to promote a free, fair and flexible property market and to reduce the unnecessary costs of doing business. The Association wants to see root and branch reform of business rates, revisions to the Code of Practice on Business Leasing, and the red tape challenge implemented in full.
Warning to government
Nicholls concluded:
“There is a strong warning to government in all of this. Those sectors delivering the greatest growth and investment – food led, high street operators – are also those reporting the greatest pressure from legislative costs and business rates. Whilst the sector is well placed for steady growth, it remains volatile and highly responsive to external pressures. Get it right and we will be able to capitalise on these positive indicators. Get it wrong and investment in jobs, outlets, high streets and communities could all too easily suffer.”
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