A higher cost of living, combined with more expensive student loans and cultural changes, are expected to impact on the profitability of the UK pub sector in the short term, according to the latest report by Fitch Ratings.
The report sees Fitch’s outlook for the UK pub sector remaining negative, driven by ongoing structural decline. Financially pressed 18-35 year olds may continue to curtail UK pubs’ revenues over the medium term, with factors such as rising student loans and higher rent making drinking out less affordable. The rise of craft beer companies have also led to a decrease in the quantities consumed in mainstream pubs, especially by millennials.
Internal aspects, including the rise of the Living Wage, are expected to put pressure on pubs’ profitability, possibly leading to job losses as companies try to limit their expenditure. Similarly, the recent overall decline of on-trade sales and total alcohol consumption over the longer term, as well as the the MRO announced in March 2015 and the EU referendum in June 2016, are likely to make an impact.