Stonegate pub group debt shows how perilous things are for hospitality

Last week it was announced that Stonegate Pub Company, the largest in the UK, owners of 4,500 managed houses which include successful brands such as Yates, Walkabout and Slug and Lettuce, is seeking to refinance debts worth a staggering £2.6 billion. It says it is "confident" of doing so.

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However, not so convinced are the GMB Union which has raised concerns over the “crippling payments to service the debt”, claiming that the company's finances are “lacking in transparency".

This is very sobering news for Stonegate’s 19,000 employees, not least those employed at their 40 Scottish pubs whose jobs are now at risk.

Stonegate isn’t the only large company stuck between a rock and a hard place. Hospitality giant Revolution Bars Group has decided to shut more than 12 % of its estate to protect the group and reduce future site losses.

And due to a catastrophic slump in trade Rekom UK, the UK’s biggest nightclub operators and owners of well-known brands Atik and Pryzm, have been forced to bring in the administrators, which will almost certainly see most of their 35 venues and 12 late night bars shut their doors for good.

Nearer to home, the Ellon-based brewer and pub giant BrewDog, with 75 units and 2000 staff, also hit the headlines, when it announced that in order to reduce multi-million-pound losses they would no longer be paying employees the “real” living wage but the national minimum wage A move which received absolute pelters on social media.

The cost of living crisis is hurting pubs (Image: Staff)

Of course, it’s not just the big boys and girls who are perilously close to sliding off the edge of the abyss, but also the hundreds of community pubs and family run bars and restaurants which are being squeezed out of existence. The forgotten victims and casualties behind every slump.

In Glasgow, where its beleaguered hospitality sector has suffered more than most, exacerbated by the calamitous introduction of its Low Emissions Zone, last orders were called on another two small businesses: sea food restaurant Scamp, on Renfield Street, and the Beer Café in the Merchants City.

In Aberdeen, family-run, broken-hearted Olive Alexanders and Bar Below have called it a day due to decreased footfall, caused in the main by the council's reckless implementation of its bus gates and pedestrianisation. Ominously and regrettably, like the stricken Horizon sub-postmasters, worried business owners, right across Scotland, are currently poring over their festive figures, crunching the numbers, checking and rechecking their bottom lines, with many already sickeningly in the know that without any meaningful government interventions and investment, they will soon have to shut up shop.

Colin Wilkinson of the Scottish Licensed Trade Association said. “The outlook for the hospitality trade in 2024 remains extremely challenging. Regrettably, we have already seen significant businesses closing their doors for the last time and more are going to follow without the previously pledged government support” Stephen Montgomery, of the Scottish Hospitality Group, told me, “Historically, January can be quiet, but late-night venues are reporting a really hard Christmas trading, with the first two weeks of January being the hardest seen in many a year. High streets in cities are becoming quieter and shops are boarding up, and that needs to change. Councils need to think of ways to change that”

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And Michael Kill, CEO of the Night Time Industries Association, added: “The night time economy is grappling with the widespread impact of external factors, unpredictable consumer behaviour, ongoing financial challenges, and the limited sustainability of businesses without support. To ensure its survival and facilitate a robust recovery, it’s imperative we address these issues with targeted government interventions”

The acute financial pressures and problems facing the hospitality sector are not unique to Scotland. The cost of living crisis, soaring energy costs, inflationary pressures, Covid legacy debts, and spiralling supply costs, has affected everyone in Britain. As such, Westminster must do more to help, and a continuation of the freeze on energy costs and a cut in the VAT rate to 12.5%, similar to European rates, would give us all the springboard we need to aid recovery.

The profligate Scottish Government must also step up to the mark. They have ignored the sector's pleas for far too long. With business closure rates running at double of those in England, they should immediately introduce the 75% business rates relief scheme, which has twice been denied to Scottish businesses. That would give many of them the breathing space they need in order to recover.

To pay for it? Well, they could stop wasting hundreds of millions on mad cap, financially incompetent schemes and projects such as the disastrous Deposit Return Scheme, punitive LEZs, and rusting ferries that are over-budget and years late, and use that money instead.

They should also fully engage with the sector, a vital contributor to the economy and major employer, showing more urgency, concern and empathy, than they have done of late. It’s what responsible governments do.

Finally, to quote Kate Hopkins, of UK Hospitality, they should “never be allowed to forget that behind those closures are human tragedies for those who have lost their businesses, their livelihoods, their jobs and homes”

Donald Macleod is the MD of the Holdfast Entertainment Group/CPL and a spokesman for the Night Time Industries Association