Pubs are facing a significant imbalance in business rates compared to supermarkets, according to Tim Martin, the founder of Wetherspoons. Martin highlighted that pubs pay approximately 20 times more in business rates per pint than supermarkets do. This difference results in an extra cost of around 28p per pint for pub beers compared to only 1.5p for supermarket equivalents.
The disparity, as explained by Martin, stems from the fact that supermarkets do not pay VAT on food sales, unlike pubs that pay a standard 20% rate. This situation allows supermarkets to offer beer at lower prices, effectively subsidizing the selling prices of alcoholic beverages. Consequently, pubs have lost about half of their beer trade to supermarkets since 2000.
Martin expressed concerns over the impact of this tax gap on businesses, high streets, and the social aspect of the nation, emphasizing the importance of pubs as places for temporary escape. These issues have been brought to light by The Mirror’s campaign, “Your Pub Needs You.”
In response to the challenges faced by pubs, Greene King proposed reforms to base business rates on profits rather than the current system. The government has also pledged to address these issues. However, Martin expressed skepticism about Greene King’s approach, suggesting that a profits-based analysis may not be the ideal solution.
The campaign by The Mirror advocates for government support for pubs, recognition of exceptional community contributions by pubs, and assistance for community groups seeking to purchase local pubs. Data from the Campaign for Real Ale (Camra) revealed a concerning trend of pub closures, with nearly five pubs shutting down permanently each week in the first half of the year, leading to over 600 long-term vacant establishments.
Despite the industry challenges, Wetherspoons is defying the trend by announcing plans to open approximately 30 new pubs in the coming year, marking its most substantial expansion in a decade. This growth strategy follows a period of closures driven by financial pressures and shifting consumer behaviors. Wetherspoons currently operates 794 pubs, with recent openings offsetting some closures, indicating a resilient approach to expansion in the face of industry changes.