The pub chain Young’s has said it is preparing to take an £11m annual hit from rises in employer taxes announced in the budget.
The chief executive, Simon Dodd, said a rise in employer national insurance contributions (NICs), coupled with an increase in the national minimum wage, would result in “significant increased costs for our industry in the near term”.
“We will work to see how we can mitigate these headwinds without passing on all the cost to our loyal customers,” he said.
A spokesperson later said that the company would not pass on any costs to customers above its usual yearly price rise of 2% to 3%. Instead the company would offset the impact of higher business costs by increasing sales and investments in its pubs, greater use of technology to maximise spend per head, and better deployment of staff during busy periods.
Dodd also called for “certainty and delivery of real business rate reform which will benefit all hospitality businesses”.
He is among the heads of more than 200 of the UK’s largest restaurant, pub and hotel groups who have written to the chancellor this week to warn that some businesses would be forced to close or cut jobs and investment as a result of the tax rises.
The chair of JD Wetherspoon, Tim Martin, has warned of price increases across the hospitality industry, saying that the pub chain’s tax and business costs would go up by about £60m over the next year. Fellow pub chain Fuller, Smith & Turner is said to have told Jonathan Reynolds, the business secretary, that its annual investment could be halved to £30m due to rising costs.
Business leaders say the government has not fully considered the impact of the tax rises on sectors that employ a large number of part-time workers, such as hospitality.
The rate of employers’ NICs will increase by 1.2% to 15% from April, while employers will also start to pay NICs on employees’ earnings from £5,000 instead of the current £9,100 threshold.
The warning from Young’s comes as the company reported higher half-year profit, helped by the Euros football tournament in the summer. Pre-tax profit for six months to 30 September rose by 3.3% to £25.3m, while revenue climbed by 27.2% to £250m.
Dodd noted the company’s recent acquisition of the City Pub Group had been successful, but poor summer weather kept punters away.
“The weather was frustrating yet again, with a wet spring and limited periods of prolonged sunshine during the summer months,” he said. “However, Euro 2024 and England’s successful run to the final provided a welcome boost to drink sales with our pubs performing exceptionally well on match days.”