Q&A with Stephen Owens and Mark Robson, Chair of the British Institute of Innkeeping and Managing Director of New Dawn Pubs

This is a transcript of the interview which ties in with our Business Outlook 2025 report. 

Stephen: Hi, I’m Stephen Owens, Managing Director of Pubs & Restaurants at Christie & Co, and I'm delighted to be joined today by Mark Robson, Chair of the British Institute of Innkeeping (the BII) and also Managing Director of New Dawn Pubs. Welcome Mark, it’s good to see you again.  

Mark: Good to be here, thanks for having me.  

Stephen: Absolute pleasure, thanks for joining us. Before we start, Mark, I wondered if you could perhaps give us a bit of insight into your role at the BII, and also how you found yourself in the pub sector – which, from your biography, looks like it’s been quite an interesting journey! 

Mark: I am chair of the BII, which is a charity. We have a number of trustees, as you’re aware, and my role is to organize and coordinate the trustees, and to help and guide the executive team. We’re a small team at the BII, but we have some very talented and driven individuals who are really committed to supporting the pub sector. 

And I'm an operator, so one of my key roles is to provide feedback on what's happening on the front line, what's happening in pubs, where our challenges are, where our opportunities are, and bring that insight and knowledge to the organization, as well as coordinating the trustees at board meetings and inputting into the overall strategy of the team and the organization. 

In terms of the pub trade, for me it was one of those things I just had an itch for when I was younger, that I needed to scratch. I'm about 22-23 years in the trade now.  

It started with a small, tied pub, and we built up a small estate of mainly freehold pubs. Then, in 2020-2021 during Covid, we took a private equity investment with a view to building up the business even further. But it didn't work - we had some fundamental differences with the investors we had, so we exited and started again with a small collection of pubs. Today our business is called New Dawn Pubs, and we have three pubs in Surrey and Hampshire. We’re plodding on and facing the challenges that the industry has right now. 

I enjoy it and actually having spent a long time building up the business, I'm really enjoying being much closer to it with a smaller number of pubs, being more focused and feeling the heartbeat of the business a bit more than perhaps I did when we were bigger. 

Stephen: In our Business Outlook publication, we look at some of the key trends last year and some of the challenges looking forward. I'd be interested, Mark, to get your view, looking back on last year, on what you saw the key trends being throughout the year and how you faced some of those challenges? 

Mark: We’ve been on a bit of a rollercoaster, haven't we, in the pub industry? Really, since we came out of Covid, and then we hit the energy crisis and the cost-of-living. We seem to go from one drama to another, so very often that snatches the headlines: what we're doing as an industry, and what's keeping us awake at night. But when you're back on the shop floor, it's quite an interesting place to be at the moment. I think for us – and this is echoed when talking to lots of other operators – we’re definitely finding that people still want to go to the pub, and they're still enjoying the pub as much as they ever did. 

It's more expensive now than it was a few years ago. Prices have definitely pushed north in the last couple of years. I think the weekend, that Friday-Saturday-Sunday visit, is still there for consumers and they're still enjoying it as much as they ever did, for a bite to eat with the family or a pint with your mates. 

But I think midweek has become quite a lot more challenging. You’ve really got to give people a reason to come out. That’s what we've seen a lot of, and I think that ties in with consumer behaviour evolving and people enjoying more experience-led opportunities. Perhaps not just wanting to go out for a pint on a Tuesday night, but, if there’s live music, or a quiz night, or a competition, it’s people opting to be drawn out of the house to visit for these occasions. 

We’ve seen a lot of that, and in the last year to 18 months we've put a lot of planning into making sure that, without oversaturating it and having things going on too frequently, that we've always got something to talk about. We've always got something to entice people and excite people and give them a reason to come out. 

I think that's been an interesting trend. The other thing which continues to amaze me is the development of the ‘low’ and ‘no’ category, and how much every year it just gets stronger and stronger, and there's more innovation. We have so many more products available to us now rather than just a beer or a couple of beers. We've got a fantastic portfolio of flavoured gins and vodkas, flavoured spirits, which have really come a long way in the last couple of years. The quality behind them is fantastic. 

So, it’s about making sure we exploit that as much as possible. In the last year, across all our pubs, we have it on draught, we have Lucky Saint on draught, which has been a real revelation and gone down incredibly well. The breadth of product offering we have in this category now is phenomenal, and the uptake is huge. Our highest-selling bottled beer, two and a half times over, is a non-alcoholic one across all our pubs. It’s amazing, really, to think that we sold two and a half times more of a 0% beer than we did any other alcoholic product that we stock in a can or bottle. It’s quite extraordinary. 

Stephen: Just picking up on your point on sentiment, about people wanting to go out and socialize and use hospitality. We’ve seen that in a slightly different way in the transactional market, where we sold more pubs last year than we have for the last couple of years. The sentiment in terms of buyers who want to come into the sector remains strong. 

And just shy of 90% of the pubs we sold last year remained as pubs, which I view as really positive. Because sometimes, people might pick up the paper, read the press or look at the negative sentiment particularly around the Autumn Budget last year, which yes - it wasn't great for hospitality, it wasn't great for pubs. But this doesn't seem to have dampened consumer confidence in the sector, or consumers wanting to use pubs and hospitality premises. And likewise, buyers as well. 

COST PRESSURES 

Just touching on those costs, Mark, which are an issue - particularly around National Minimum Wage, National Living Wage and National Insurance. What are you having to do, and what are your members having to do, to counteract some of those negative cost pressures? 

Mark: As you said, it really was a disappointing and quite disastrous fiscal event. I think what has disappointed most people I've spoken to in our trade is that the government ran a manifesto that was pro-growth, pro-business, and came into power with a huge majority. And their actions are so anti-business and anti-growth across the board, and I find that quite staggering. Unfortunately, there’s going to be some fallout on the back of it. I think a lot of it is unintended consequences, but it’s going to have a pretty big shock in the sector.  

Countless operators I've spoken to have reduced opening hours. How many pubs do you know now that don't open on a Sunday night, or a Monday or Tuesday? They are so frequently seen. Reducing hours is not good because it's a reduction in employment, a reduction in revenue, a reduction therefore in the tax take so that’s not pro-growth.  

I've seen – and this is including my own business - operators laying people off, making people redundant. They’re really looking at their businesses and saying look: we've got to justify every penny that we spend. Every cost we've got in this business, we’ve got to scrutinize. And sometimes that means trimming back and taking out some of the positions that are not business critical. We’ve done that with two roles, and we're pretty small. When people are looking at what they need in terms of recruitment going forward, they're going to make very different decisions to ones they did before the news in the Budget. 

It’s going to have a really big shock. My business is small, we turn over £4.5 million. We're not a big business. But the additional cost to us in the three changes – employers’ National Insurance, both the reduction in the threshold and the increase in the rate; the increase in the Minimum Wage; and the reduction in Business Rate Relief - is going to cost our business £240,000, which is 5% of our revenue. Over 5%, probably 6% of our revenue. 

It's not proportionate to other industries or to the size of the business. I really do worry for the sector. I’m in the slightly fortunate position that we own two freehold pubs that are free of tie lease, so we probably make a little bit more margin than some of my other industry colleagues. If I was running a tied pub, or on an agreement where perhaps there wasn't that level of profitability, I would really be questioning whether I want to continue, which is a very sad state of affairs. It’s important that we make sure the government realizes. 

Stephen: In terms of the ability to pass on some of these costs through prices to customers, Mark – we’ve seen quite a lot of operators taking price over the last couple of years whilst we’ve had inflation, and I guess consumers have got used to seeing rising prices. But, to a degree, we’ve seen the inflationary pressures ease a little bit, we've seen interest rates beginning to come down. Is that ability still there, or do you think consumers are a little bit more sensitive now to price increases than they might have been over the last couple of years? 

Mark: There’s a couple of points here. Firstly, on inflationary pressures, the last set of results started to tick back up. My personal view is that inflation will increase this year. And as a result, at some point, interest rates are probably going to have to stall or stay where they are, if not rise. The country is not growing, we're stagnating, and that's a terrible position to be in. 

In terms of pricing, there is no doubt that everybody in our sector is going to move their prices this this year. In fact, most people have probably already done it. We certainly have. It isn't a position that people want to take because we're so heavily taxed in the sector, we're so overtaxed, that we're already charging prices that quite frankly are a little bit eye-watering in places. But we have to make more margin to be able to cover these costs.  

I've said this many times before, I'm a big supporter of Minimum Wage, and I think it's a really good policy to have. But we’ve got to raise it sustainably, and this increase that goes ahead in April will take it to a 50% increase in five years. No-one’s put their prices up by 50% in five years. That isn’t sustainable. Any industry, like hospitality, that is dominated by people is going to really feel the pinch, so you have no choice but to increase prices. 

Six months ago, there wasn't much awareness from consumers about the pressures the industry is facing. There’s been so much media attention following the Budget on the Chancellor and on the policies put forward. I think actually that's been good for us, in terms of customers being more aware of the challenges the sector is facing, and a lot of politicians have taken up the gauntlet for us and are really championing the cause of pubs, the good they do in communities, trying to make the government see sense. 

In answer to your question, undoubtedly prices are going to have to go up and we’re going to have to get used to everything being a bit more expensive.  

Stephen: I think the really positive thing, which collectively we've done as a sector, is try and say to the government, look: hospitality and pubs could be huge engines of growth. By discouraging investment, it’s holding back that potential. I wonder to what degree, Mark, you sense that the government has heard that and is working with the sector to try and use hospitality effectively, and get some growth back into the economy? 

Mark: One of the great things about our sector is that it's full of a lot of talented, driven individuals, and it's very entrepreneurial. People can see from a relatively young age a path to being really successful in the industry. There are relatively low barriers to entry into the pub trade and that really dangles an entrepreneurial “carrot”. But unfortunately, the way the government is changing taxation in the sector means they're not driving this entrepreneurial spirit, they're dampening it. And that's really worrying because if you make changes to the cost of employing people, to Inheritance Tax, to Capital Gains Tax, that does nothing but put a wet rag over the fire you're trying to ignite.  

We can be - and we've done it before, we’ve proven it – a really high-growth, high-employment sector that really helps take the UK economy forward. At the moment we're not doing that, we're stagnating, because the government is more concerned with trying to load cost onto business than trying to get that fire going a little bit quicker. I wish they would adopt a different approach on it, because I think they’d get a much better result. 

TECHNOLOGY AND INNOVATION 

Stephen: Some of the innovation which has come out of the sector is quite interesting as well. By using technology, operators are looking to mitigate some of these cost pressures. I wonder, in terms of innovation and technology, what you might have used within your businesses, and what your members use, to keep ahead of new trends and try to help with cost issues as well? 

Mark: Yes, this isn't new for the sector. In the last ten to fifteen years, there’s been a huge adoption of technology. I remember when I came into the trade, we had very little technology, and now we have a whole tech stack and they all talk to each other, they all integrate with each other.  

And you can't be without them. What do they do? They drive efficiency. They make us more productive. They give us more insight. They help us run our businesses in the most proficient way that we can. And that will only continue - we’ll continue to adopt things that make our businesses better. 

Just look at labour management. Ten years ago, most operators did it on a spreadsheet, putting in people's hourly costs and salaries. It was a really fragile bit of scheduling management. 

But now, the tools available, there are so many of them and they're brilliant, they’re really effective. They give you minute-by-minute, hour-by-hour insights into your business, what your revenue is per hour, labour costs. It’s really good, and that will only continue. 

Stephen: Some of the booking and ordering apps have moved on massively, haven’t they? I guess that was accelerated by Covid - I booked a restaurant last week and got several reminders in the days leading up to the booking, to try and counter no shows. So technology has massively moved on which I think is beneficial for everybody. 

OUTLOOK FOR 2025 

Stephen: Now, the “crystal ball” gazing, Mark! Looking into the future and the year ahead, it's difficult sometimes to see the positives, but the days are getting lighter, and there seems to be more people out socializing and using hospitality premises. There seems to be a little bit more optimism around us. I wonder what your thoughts are on the year ahead? 

Mark: If we're looking at positives, the like-for-like sales growth is really positive. But then we've put prices up quite significantly over the last year or so, so that is to be expected. But what that says is that people still want to go to the pub. They still want to go to the pub with their friends, their family, their partner, they want to go and enjoy the British pub. That’s fundamental and that's fantastic in terms of being positive. I think top-line sales will continue to develop and grow, and people will hopefully continue to have great experiences.  

I do think that the sentiment is largely pretty negative in the industry. The sales element is positive, but profitability is not where it was, and I think that's worrying people. I can't really see where that's going to change unless the government does a U-turn on their policy and tries to actually drive growth rather than keep adding costs.  

I'm not sure how much more positivity we're going to get. It has stifled investment, and people are a bit muted, sitting on their hands a little bit. We certainly are. We were looking at another pub and we decided not to do it, we're just going to stay as we are. 

But another positive I would add, and this is probably a fallout of the general economic conditions at the moment, is that I’ve never seen employment so full in our sector as in the last six, nine months or so. We’re fully staffed. I’ve not said those words for a long time and, actually, we've got people knocking at the door saying, “have you got any vacancies?” and we're saying we don't. I think that's echoed by a lot of our members as well. Obviously, there are regional or geographical differences, but generally that pressure we've been under really for five or six years with struggling to find and retain people I think has really eased. 

Stephen: Yes, there have been recruitment challenges across a lot of sectors, but hospitality in particular. If that impacts on the ability to provide a good service, it discourages people to use pubs, restaurants and hospitality premises. Some of the experiences I've had over the last few months have been really positive, and I think that's been helped by the ability for operators such as yourself and your members to have a full complement of people who are engaged and want to work in the sector, and that's one of the key things. 

From my perspective, I’ve worked in the pub sector for 40 years, my grandparents ran pubs so it's in the blood. I'm passionate about selling the opportunities within the sector, and like the point you made earlier, you could join as a pot washer and end up as Chief Executive. It’s one of the few sectors and industries where genuinely there are no barriers to people progressing.  

Mark: There are countless stories like that example, of people going from bar to boardroom, or pot wash to publican and running their own businesses, scaling their own businesses. We are a sector where, if you're prepared to work hard and knuckle down, with a bit of luck and a few risks, you could really do well. I want those opportunities to come back because that’s part of what makes our sector so brilliant. The last thing we want is people not wanting to come and get involved in pubs because it either doesn't give a good enough return or the opportunities aren’t strong enough. 

Like you, I'm really passionate about pubs. It’s my life and when I'm not working, I'm in a pub somewhere! I love enjoying different pub environments, different parts of the country, seeing different members and how people do it. We've got to keep them going, they’re so important for our country. Pubs are so special and so unique. It’s so important that the government listens to us and makes changes to the policies they're planning on implementing in April.  

Stephen: Yes, I think everybody recognizes the huge potential of hospitality to drive the economy. The more we articulate that to the government, I hope the more they'll help us. But like you, I’m doing everything I can to keep the pub going outside of my professional work as well!  

Many thanks for your time, Mark, it’s been a real pleasure talking to you today. Hopefully the rest of the year brings some positive trading for all of us. 

Mark: Let’s hope so and thank you for having me.  

 

To watch the full video interview, visit:https://www.youtube.com/watch?v=4M8sBjlC-kc