Pub owners face bleak future as costs explode
Nick Evans, co-owner of the historic Old Crown Coaching Inn in Oxfordshire, is staring down a financial abyss, battling surging costs and a bleak outlook for the hospitality sector.
A battle for survival in a changed industry
The charming pub and hotel, once frequented by Oliver Cromwell himself – including a honeymoon suite boasting a former ‘hanging judge’s’ chamber – is now grappling with a perfect storm of rising expenses, leaving its owners facing an uncertain future. Evans, a former City trader, admits the industry has become a relentless series of setbacks since Covid-19.
The latest blow – a triple whammy of escalating minimum wage, business rates, and a volatile energy market – threatens to extinguish the flame of this traditional establishment. With a projected annual revenue of £1.4 million, despite a significant increase from £440,000 prior to the pandemic, the pub’s costs are spiraling out of control. Beef prices are soaring, and suppliers are demanding higher rates, pushing the pub’s profit margin perilously close to zero.
Scaling back dreams of expansion
Evans and his co-investor, Mike Webb, poured £625,000 and a further £350,000 into renovating the Crown, securing the freehold and adding two additional pubs under Greene King’s management. But plans to expand to 20 rooms – a project that could attract new customers and create local jobs – are now firmly on hold. ‘You’re running the risk of pricing young people out of the market,’ Evans states, citing the impact of the minimum wage hike on part-time workers, particularly women.
The situation is so dire that Evans and Webb are contemplating a drastic escape, contemplating retirement to Spain rather than continuing to absorb the mounting losses. The final blow comes from the national insurance contributions, plunging the business into a loss – and a £234,000 VAT bill, far exceeding those faced by hospitality businesses in European countries, a long-standing grievance within the industry. “We can’t sustain a business employing 20 people if we end up losing money. We’ll have to just say let’s go and live in Spain, we don’t need this shit any more,” Evans laments.
A grim forecast
With energy prices stubbornly high and the threat of further geopolitical instability looming, the future looks bleak. Cornwall Insight warns many firms risk being trapped in costly energy contracts, while Ofgem urges suppliers to prioritize customer fairness. But for the Old Crown, the reality is a looming £80,000 gas and electricity bill and a potential increase of several thousand pounds when the contract is renewed in July. The pub’s owners are now appealing to HMRC for a more manageable payment plan, facing a daunting battle against rising costs and dwindling prospects.
Despite a modest trading profit, the Old Crown’s financial stability is hanging by a thread. And as Evans succinctly puts it: “It’s tough, tough, tough.”