London pubs giant Young’s issues Budget warning after £11m costs hike
Pub giant Young’s, which has locations across London and the South East, has insisted it has no plans to increase the price of drinks despite the Budget adding around £11m in annual costs.
The listed group said it was instead focusing on increasing efficiency, better use of technology and internal investment in order to deal with the impact of the increases to the minimum age and employer’s National Insurance.
Speaking to Morning Wire, chief executive, Simon Dodd added that the “biggest disappointment” in the Budget was the lowering of the threshold for National Insurance contributions, which will increase the cost of hiring part-time workers.
The comments come as Young’s posted a rise in its revenue for the first half of its financial year after the integration of City Pubs and its summer success during the Euros.
The firm’s total revenue rose 27.2 per cent to £250m, according to new figures filed with the London Stock Exchange.
It has also raised its interim dividend to 11.53p per share, an increase of six per cent.
Young’s adjusted EDITDA (earnings before interest, tax, depreciation and amortisation) rose 23.2 per cent to £59m, while operating profit was up £7.1m to £38.1m.
Dodd said: “We will work to see how we can mitigate these headwinds without passing on all the cost to our loyal customers.
“We would like to see certainty and delivery of real business rate reform which will benefit all hospitality businesses.”
Over 200 of the UK’s biggest hospitality businesses signed a letter to the Chancellor last week warning that the additional tax bill will force some businesses into liquidation and that others will have to drastically reduce their headcount and slash investment in order to meet the additional costs imposed by Labour’s first Budget.
Double-digit revenue growth for pub giant Young’s
Young’s said its rise in profit was driven by a “sector leading margin of 15.2 per cent”, despite “continued national living wage increases of almost 10 per cent, utility costs and first-quarter dual running costs from the City Pub Group acquisition.”
The Euros also boosted sales, with pubs performing “exceptionally well” on match days, the company said. During the seven England Euro matches, Young’s pubs together sold over 850,000 pints.
Dodd added: “We’ve achieved a huge amount as a business in the last six months, reflected in another strong set of results.
“The City Pub Group integration has gone well, with the pub teams welcomed into the Young’s family and all operational control brought together under one leadership team.
“Our teams have done a fantastic job, and I’m looking forward to seeing our pubs thrive together.
“Given the quality of our estate and on-going strategy, we remain confident in our ability to deliver long-term growth, including achieving the planned synergies from the City Pub Group acquisition.”