Shropshire brewer 'holding its nerve' on making big price increases as costs surge

The hospitality trade is facing absolutely enormous pressures across the board on costs of energy, business rates, wage increases, and foods such as potatoes, where VAT is set to return to 20 per cent.

"We don't want to increase prices by 30, 40, or 50p," said Jason Whittaker, commercial director of Market Drayton-based Joule's. "That's only going to increase pressure on levels of trade, with customers going out less often."

Joule's has 42 pubs in its estate, with two being managed and 40 that are run by tenants, and Mr Whittaker said they have emerged in good shape from a challenging two years during the pandemic.

Their focus is on urban community pubs like the Cock Hotel in Wellington, which is reopening next week after a £1m-plus investment.

"We have come out of that in really good shape, really strong and stable," he said.

But the next challenge, from rising prices, and how to respond to that is fast looming for the business.

"Everything is going up," Mr Whittaker added. "The standard way to mitigate against rising costs is to put retail prices up, and this is usually around 10p per year.

"What's interesting this time round is that just in order to remain neutral the level of increase to cover all costs, excluding beer, would be 20-30 or 30-40p, perhaps more.

"But we are holding our nerve on this until we can see how the market moves, and how others react."

The company is planning to absorb increasing costs in "the short term", which means until things become clearer in April.

Putting prices up would increase profit margins for the company but it would also put customers, who are facing spiralling increases themselves, off going to the pub.

Mr Whittaker said the eventual decision was "on a knife edge."

But he thinks they might be able to ride out short term cost pressure increases by taking other measures, including on staff productivity, and by getting discounts from suppliers.

Mr Whittaker is working on arranging for all the pubs in the estate to get discounts from utility suppliers.

The tenanted pubs all arrange their own, but if they all get together the bulk supplier may be cheaper and save them cash.

With Chancellor of the Exchequer Rishi Sunak due to make a budget statement next Wednesday (March 23), Mr Whittaker is holding out hope for a lifeline to the industry.

"During the pandemic a few errors were made but overall the support from the Government was incredible," he said.

"I will be listening to next Wednesday's statement in great detail.

"I hope that they can offer some support."

Before then, on Tuesday, the Cock Hotel in Wellington will be reopening after a vote of confidence investment of more than £1m.

It's the company's second biggest ever investment in a project, behind the £3m that Joule's pumped into its flagship Crown Wharf project in Stone.

Mr Whittaker said: "We are crossing our fingers and toes - we've gone all out to give it the best chance possible.

"We think it is something that the community can be very proud of and that they will turn out to support the Cock Hotel."

Reacting to the recent news of the demise of south Shropshire-based Wood's brewery, Mr Whittaker said he is "saddened but not surprised" because the entire pub trade is under real pressure.

"Pubs that rely on real ale have reduced the number of lines they have on the bar, which has a knock on effect for brewers who supply them."

Joule's, owning its own reasonably sized pub estate as well as a brewery, has kept all its tenants during the pandemic and Mr Whittaker says they have returned to "pre-pandemic" levels of trade, putting them in a good position for the future.