Economies of ale: pubs in the time of COVID-19

Pub landlords' “high confidence” about their future business survival has peaked above 20% for the first time

In May 2021, the percentage of pub and bar owners who had “high confidence” in their establishment surviving the next three months passed 20% for the first time since November 2020.

Pubs and bars were among the thousands of non-essential businesses told to close since the first coronavirus lockdown in March 2020. At that time there were 38,870 pubs and bars in the UK employing 467,000 people.

While funding schemes have been introduced by the government to help keep these businesses alive until they are able to resume trading fully, the series of lockdown measures have resulted in the establishments shutting up shop for months at a time.

For this article, the Office for National Statistics (ONS) is using the results of the Business Insights and Conditions Survey (BICS) from October 2020 onwards, which shows that in October 2020, just 6% of landlords had “high confidence” that their establishments would survive beyond three months. By early February 2021, the proportion of “high confidence” had dropped to its lowest recorded level of 1%.

Pub and bar business confidence has been weak compared with all other businesses but is starting to improve

Percentage of businesses who reported high, medium and low confidence of survival over the next three months, UK, 2 November 2020 to 16 May 2021

Notes:

1. Final weighted results Wave 17 to 30 of the Office for National Statistics’ (ONS’) Business Insights and Conditions Survey (BICS).

2. Waves may not add to 100% because of rounding and exclusion of other responses: "no confidence" and "not sure" being removed.

3. Caution should be taken when interpreting the results for pubs and bars because of a small sample size, sample variation and possible drop off because of some of the pubs closing down.

Download pub and bar business confidence data (XLSX, 12KB)

In the past month, there has been a revival of confidence, with the most recent data for early May 2021 showing 24% of pub and bar owners had “high confidence” about the survival of their business beyond three months.

This return of confidence could have been the result of the unveiling of the road map out of the pandemic and the subsequent reopening of hospitality.

While the return of “high confidence” has shown promising signs of recovery, the drop in the number of pub and bar bosses who felt “low confidence” in the ability of their business to survive the next three months failed to last.

That “low confidence” dropped from 63% in November 2020 to 3% by April 2021, but by early May 2021, had risen significantly to 19%.

Confidence among pub and bar owners has been both considerably lower and less stable, than that of other business owners.

Furlough scheme has been vital for pub staff

Prior to the pandemic, employment in pubs and bars (particularly pub chains) was increasing, as we showed in our previous Economies of ale article. Given the interruptions to trade in 2020, it’s likely that staffing levels will have changed significantly. Wider reports from those representing the hospitality industries suggest jobs may have been lost during the pandemic, with workers retraining for other industries.

The government’s HM Revenue and Customs Coronavirus Job Retention Scheme (CJRS), also known as furlough, has been an important means of business support during the pandemic. It has enabled landlords to keep staff on their books while their establishments have been closed.

At its peak in the November 2020 lockdown, 91% of pub and bar staff were on furlough. This number has now decreased to 55%.

This compares with overall 8% to 15% of staff on furlough in all other businesses during the same period, indicating the heavier reliance of pubs and bars on the scheme.

We can increasingly see a downward trend of pub and bar staff on furlough since restrictions were lifted on beer gardens. Despite this, the percentage of staff that were on furlough has remained high. This suggests that where pubs and bars have been open, they have been operating with minimal staff.

The percentage of the workforce on furlough in pub and bar businesses is considerably higher than that of all other businesses

Percentage of workforce reportedly on furlough, UK, 19 October 2020 to 2 May 2021

Notes:

1. Final weighted results Wave 17 to 30 of the Office for National Statistics’ (ONS’) Business Insights and Conditions Survey (BICS).

2. Caution should be taken when interpreting the results for pubs and bars because of a small sample size, sample variation and possible drop off because of some of the pubs closing down.

Download data on the percentage of the pub and bar workforce on furlough (XLSX, 11KB)

Not all pub and bar jobs will have been saved by the furlough scheme. In the weeks just after Christmas 2020, 12% of pubs and bars reported that it was likely they would make redundancies in the next three months. This number fell to approximately 4% by late February 2021. It is unclear whether this is because of increased certainty or because the redundancies had already gone through.

Run up to Christmas was financially difficult for pubs

The weeks leading up to Christmas are normally busy for pubs and bars, but December 2020 saw huge losses in trade.

The tier system, introduced on 2 December 2020, placed areas of England under specific sets of restrictions. Pubs and bars in areas placed under tier 3 and 4, the strictest of conditions, had to close. The tier system was replaced in England on 4 January 2021 by another national lockdown.

By mid-December 2020, more than 80% of pubs and bars recorded that their profits were more than 50% below what they would normally expect for the time of year, with that number soaring to 100% by late December 2020.

Profit losses of all pubs and bars were more than 50% lower than normal expectations for Christmas 2020

Percentage of businesses who reported profits had decreased by more than 50% of normal expectations, UK, 19 October 2020 to 2 May 2021

Notes:

1. Final weighted results Wave 17 to 30 of the Office for National Statistics’ (ONS’) Business Insights and Conditions Survey (BICS).

2. Waves may not add to 100% due to rounding and exclusion of other responses: "Profits have increased by more than 50%", "Profits have increased by between 20% and 50%", "Profits have increased by up to 20%", "Profits have stayed the same", "Profits have decreased by up to 20%", "Profits have decreased by between 20% and 50%", "not sure" and "not applicable".

3. Caution should be taken when interpreting the results for pubs and bars because of a small sample size, sample variation and possible drop off because of some of the pubs closing down.

Download profit loss data of pubs and bars (XLSX, 11KB)

By late January 2021, pubs were still reporting a larger loss of profits compared with all other businesses for the time of year. However, those losses have recently started to decrease, with around 33% of pubs recording significant profit losses, because restrictions have eased since mid-April.

Recent reports confirm that the positive shift shown in our analysis has continued through the latest unlocking of restrictions on 17 May. This will be explored further in our upcoming publication on the hospitality sector, due to publish in July 2021.

About the data

The indicators and analysis presented in this article are based on responses from the Business Insights and Conditions Survey (BICS).

BICS is a voluntary, fortnightly survey that captures businesses' responses on how their financial performance, workforce, prices, trade, and business resilience have been affected, over a two-week reference period.

Because of a lack of imputed data, these estimates may differ from published estimates. A detailed description of the weighting methodology can be found in the recently published Quality and Methodology information report.

BICS responses were sifted by their Standard Industrial Classification (SIC) Code. SIC Code "56302: Public houses and bars" is used to capture "Pubs" and any other respondent is classified under "All other businesses".

The quotes used in the article are derived from the free-text responses within BICS. Sentiment analysis has been carried out and the responses have been summarised and rephrased to safeguard the anonymity of the respondents.