Last orders? The fate of Welsh pubs hang in the balance as they open indoors this week
It is a Tuesday evening in late July at The Pontcanna Inn in Cardiff, and beer and conversation are flowing freely in their outdoor garden. There are no empty tables.
As a group gets up to leave, a member of staff clad in a mask and gloves promptly follows with a surface cleaner and wipes.
The hostess greets us at the entrance, checking our reservation, and showing us to our table. We are handed a pamphlet explaining the steps to install the City Club app through which we will be placing and paying for our orders.
My friend, who is less technologically savvy, struggles with the download but is happy about the £5 credit that the app offers.
A member of staff tells me that they have been fully booked almost every day since pubs in Wales were allowed to open up their outdoor spaces on the 13th of July.
But some decided to wait until today, when establishments have been able to use their indoor spaces as well. A 2-metre social distancing rule between tables continues to be the Welsh Government’s default requirement, although there are exemptions in cases where that is not possible.
Rob Burnett of The Golden Cross in Cardiff tells me that their seating capacity has been reduced significantly with a 2-metre social distancing rule in place, while costs have increased.
“No one knows what my turnover will be in the future, yet my costs have gone up considerably,” says Burnett. “Just to open the pub, I’m going to have five members of staff, whereas on a regular Monday, Tuesday, or Wednesday I’d only need one or two people.”
Christos Kyriakidis runs The Mad Platter in Usk, just north of Newport. He has similar concerns as he prepares to re-open on Wednesday.
“We have moved the tables to have two metres distance in between them, which limits our capacity. If all the tables are full, we are not going to allow any more people to come in and stand,” says Christos.
“We’re expecting our income to fall by nearly 50% when we reopen.”
Under the Coronavirus Job Retention Scheme, the government was paying 80% of employees’ wages every month (up to £2,500) along with their national insurance and pension.
But from August government contributions will gradually be reduced until the scheme ultimately ends on October 31st — adding cost pressures to a sector that is already under stress.
Wales has seen one in five pubs close over the past decade, down to 2,190 compared to a figure of 2,720 in 2010.
The constituency of Alyn & Deeside in north Wales saw the most closures, with nearly half of their pubs shuttering. Cardiff South and Penarth lost 20 of its 55 pubs in the same period.
This follows a trend across the UK where the number of pubs across the UK has been dwindling in recent decades. From 44,680 pubs in 2010, the UK pub count has dropped to 39,145.
“Business costs are one of the key areas for the sector’s struggles,” says Richard Clifford, Policy Manager at UKHospitality, an industry body representing the sector.
Business rates are calculated for pubs based on their turnover, but also takes property value and frontage into account. This disproportionately affects small pubs in affluent areas where turnover is low, but property prices are high.
“Hospitality businesses sometimes have had to pay as high as 13% business rates despite representing only 2% of all business turnover,” says Clifford. “It’s been a long-running ask of the sector to see a review of this. Without these reforms, a lot of businesses will struggle.”
Rob Burnett of The Golden Cross pub in Cardiff saw his business rates more than double after the last review in 2017.
“I could not afford to pay the new rates because that would put the pub out of business,” he says.
When he went to the Council to appeal, they told him that he would have to pay the new rates until the process was through, which could take up to six months.
“I had to explain to the Council that six months of paying £2,000 every month in business rates was enough to close the pub in three months,” Burnett tells me.
“So, for the first time ever, I had to play the gay card. If they wanted to close down the longest-serving LGBT venue in Wales, I asked them to go ahead.”
The Council eventually came back with a payment plan. He could continue paying the old rate, but the balance was going to be shown as debt owed until the appeal was through. If the hearing went in the pub’s favour, the debt would be forgiven.
“It took me nearly 18 months to sort that out, which was much longer than they had said,” says Burnett. “The rate is now about £700 more than the original amount, but that’s just taxes.”
A fundamental review of the business rates system by the HM Treasury is currently underway.
The hospitality sector is also enjoying a year-long business rates holiday until the end of March due to the Coronavirus pandemic.
But business rates aren’t the only reason pubs close down. UKHospitality’s Richard Clifford says that changing consumer habits are another reason pubs are under pressure.
“People are drinking less to a degree and that’s happened over the course of the last decade. They have different desires in terms of what they want when they go out. What was suitable years ago is slightly different now, and that’s a challenge as well,” he says.
Christos Kyriakidis of The Mad Platter agrees, pointing out that more and more people are socialising at home and choosing to buy food and alcohol at supermarkets.
“Going out every weekend is not as big as it used to be,” says Kyriakidis. “There’s a lot of competition around, so you need to be unique and have a great offering.”
Kyriakidis, who is a mixologist by profession, created a whole menu of signature cocktails for The Mad Platter.
“We have to have beer to get the guys in, but the ladies tend to spend on gins and cocktails. That is where the money is,” he says. “You will never make enough from just selling beer because there’s no margin there.”
To diversify their revenue streams, a lot of pubs have been focusing on food as well.
“Food has become more important to the pubs in their offering. They’ve had to constantly adapt and diversify to meet the requirements of the market,” says Clifford of UKHospitality.
“Changing consumer habits link with the cost pressures that pubs face. These are the kind of two interlinking pressures that have led to their decline.”
As Welsh pubs re-open, their fate now rests in the public’s hands.
There has been an enthusiastic response in England, Scotland, and Northern Ireland, where pubs have been open since early July.
However, there have been instances in England where pubs have been ordered to close after Coronavirus cases were linked to their premises.
Scotland’s First Minister Nicola Sturgeon warned that hospitality businesses would be forced to shut if there were outbreaks due to flouting of guidelines.
Wales’ First Minister Mark Drakeford appreciated businesses that have been running in a Covid-compliant way and reminded others that ignoring the guidance is not an option.
“We have legal powers which allow us and others to take action if some people’s behaviour becomes a threat to other people’s health,” he said.
“Coronavirus has not gone away. We all have a responsibility to keep Wales safe.”