Is a comeback on for the British pub?

Sky News

6 hours ago

Something unexpected is happening in British pubs.
Buy a pint in Our Gracie's, Rochdale, and that's just what you'll get - no live band, no televised football match, no food - except, perhaps, a pork pie.
Sandwiched between a Wetherspoon's and a Hogarths, the independent, wet-led boozer is exactly the kind of pub many landlords and industry experts said would not survive a "death by a thousand cuts" being wrought upon the industry when they spoke to Sky News a year ago.
But figures suggest Our Gracie's, which opened in December 2023 for just three days a week and now operates on all seven, may be a sign of the industry staging something of a comeback.
Fewer, better pubs
"Pubs always adapt. They always manage to work out a way to survive," says Katie Gallagher, hospitality expert at consumer data firm Lumina Intelligence.
"What you've seen is less pubs, but not necessarily less market value, because the pubs that are left are notably better."
The market, which was worth £23bn before the pandemic, lost 61% of its value in 2020, and took three more years to return to 2019 levels, according to Lumina Intelligence.
Thousands of closures ensued, exacerbated by the ever-inflating cost of ingredients and energy, customers with less cash to spend, supermarkets offering cheap booze and, as revenues stuttered, landlords intent on selling up for a quick buck in real estate.
"Last orders for the British pub" was a headline filling phone screens, as more than 4,000 closed their doors between 2019 and 2024.
But now industry turnover is forecast to hit 2% growth next year for the first time since the pandemic and sustain it until 2028, outpacing growth in the three years before COVID-19 hit.
Average weekly sales revenue today is 15% higher than pre-pandemic levels, and closures are forecast to slow, with a decline of 214 pubs expected between 2025 and 2027.
Who survived?
"Taking it back to what a pub used to be."
That's what Jon Riley, 51, who runs Our Gracie's with his father-in-law, John McFarland, says is behind his pub's part in the sector's recovery.
"We get a lot of people coming glad that we don't do food and they're glad that we haven't got a rock band playing in the rear of the pub," he says.
"They're not forced to sit with a large group watching football, all screaming and cheering, and a group of families all eating Sunday roasts."
But at the other end of the country, business is also booming at The Devonshire in Soho, London, famed for its on-site restaurant, butchery and bakery.
Food has been central to the pub's success, winning accolades from the Good Food Guide and the National Restaurant Awards, and it hosts live music - including the likes of Ed Sheeran.
Its landlord, Oisin Rogers, dismissed media reports of pubs in decline.
"I think the narrative that pubs are becoming less important and that Gen Z don't get them and they don't give a shit about pubs is actually completely untrue."
So what is it, then, that Our Gracie's and The Devonshire have in common? How can these two ships - one a canoe and the other more of a cruise liner - both be steering through the industry's choppy waters? And how can other pubs emulate their success?
How pubs rode out the storm
Despite becoming one of the most well-known pubs in London, Rogers says The Devonshire's unique circumstances mean it does not offer a blueprint other pubs can easily copy.
His business, which opened in 2023, is lucky to be located in an area that needed a big pub and has "incredible footfall", he says.
Its restaurant is run by Ashley Palmer-Watts, the mind behind the two-Michelin-starred restaurant Dinner by Heston.
That kind of talent is available to few.
"It would have been beyond any of my hopes and dreams in 35 years of running pubs every day to go into business with somebody at that level," says Rogers.
But Morgan Schondelmeier, tax and trade policy expert at the Beer and Pub Association, suggests The Devonshire and the likes of Our Gracie's do have something in common.
"Pubs that can hone in on their niche and what added value they bring to their area, whether it's food, drink or the community value, is what you really need to succeed.
"Each community, each area of the UK, is going to be different. So it's recognising just exactly why people would want to come to your pub."
Wet-led, gastro and... coal?
For some, like The Devonshire, that means food, which comes with higher costs but better margins. For others, food just means "more money, more effort, and you won't see the return", she says.
Meanwhile, there has been a "resurgence of the community wet-led pub" in some parts of the country after residents rediscovered their local during the pandemic, hospitality expert Katie Gallagher adds.
For other pubs, diversity has been the key. This means maximising the space by hosting book clubs, mum and baby groups, music gigs or sports broadcasts, Schondelmeier says.
"You have to be a bit more diverse. I think that people who are doing well or even just breaking even are diversifying their offer," says Chris Black, who runs pub company Cornish Inns.
Between his five venues, he sells takeaways and ready meals, caters weddings, hosts charity events and coffee mornings - even opening a convenience shop inside each pub selling everything from ingredients to logs and coal.
"[We're] thinking a bit more broadly about what a pub can mean. It's not just about people going out and drinking. We're seeing a massive increase in people not drinking in our pubs - the sale of low and no alcohol is huge."
In a sign his approach is working, Cornish Inns has opened its sixth venue in its sixth year, the Bloody Bones cocktail bar.
"We're aware that it's a strange time to be opening a business when everyone else is struggling."
The next hurdle
And he's right. Despite the positivity felt in parts of the industry, April brought with it a raft of additional business costs.
The minimum wage rose 6.7% for staff aged 21 and over (£1,386 annually for a 40-hour work week) and 16.3% for employees aged 18 to 20 (£2,500 annually).
Discounts on business rates for hospitality were reduced from 75% to 40% (capped at £110,000).
Employers' National Insurance contributions rose from 13.8% to 15%, and businesses started paying it sooner. They're now taxed per employee once staff are earning more than £5,000 a year, down from £9,100, which particularly affects industries with part-time workers.
"When you've only got a small margin and the new costs go up, it can be extremely painful. And I think that is the crux of the issue that the pub business as a whole has," says The Devonshire's landlord, Rogers.
A government spokesperson said it is supporting pubs with the 40% business rates relief for 250,000 businesses, a 1p alcohol duty cut on draught pints, capping corporation tax and protecting the smallest businesses from the employer National Insurance rise.
They pointed out that the NI increase is helping to fund the NHS.
The government will introduce a "new, permanent lower [business] rate for retail, hospitality and leisure" in April next year, they added.
But Ash Corbett-Collins, chairman of the Campaign for Real Ale, said that "much-loved community locals will have to close their doors" if the government doesn't reduce business rates, VAT on pub food and drink, or duty on pub beers and ciders.
"None of this is helped by the increase in National Insurance contributions, and we are being very clear with consumers - price hikes at the bar are the fault of the government's decisions, not the licensees."
Defying expectations
Yet mitigating these costs is an area where independent, wet-led boozers may defy expectations once again, like the Old Bakehouse in Welshpool.
Landlords Paul Morris, 67, and his wife Janice, 55, say they are shielded from the hikes more than others due to their small size.
They bought and renovated the derelict bakehouse and run the micropub themselves, turning over £120,000 while only paying wages for the odd shift taken by friends and family.
By contrast, pub companies face larger wage bills and higher rent and energy costs for bigger spaces.
"We have judged success on the fact that we're still open and still enjoying it, and making a living," said Paul.