The Scottish Licensed Trade Association (SLTA) has reported that, post the success of the Commonwealth Games & Ryder Cup, government legislation is having an adverse impact on Scotland’s Hospitality Trade, and that more support is needed to prevent further outlet closures and job losses.

Impact of drink drive and minimum wage legislation

Paul Waterson, Chief Executive of the SLTA, highlighted the serious effect new government drink driving legislation and proposed minimum wage legislation is having on retailers, wholesalers and manufacturers in Scotland’s hospitality sector, as the organisation released details of their latest ‘state of the nation’ survey.

He advises that the immediate impact extends beyond pubs, as many of the businesses impacted are SMEs, who support employment, training and recognise the role they play in promoting tourism within Scotland.

Waterson said: “Our industry is totally committed to the responsible retailing of alcohol and the creation of a vibrant economy in Scotland, but we do not believe that the draconian penalties linked to new drink driving legislation are effective and proportionate. We also believe, that although our workers deserve wage increases, unless the Government makes concessions on our cost base, jobs will be lost, service levels will suffer and the number of closures will accelerate.”

State of the Nation Survey: 55% show decline in like for like sales

In their summer state of the nation survey, the SLTA has highlighted the severe impact this Government Policy is having on the hospitality and leisure sector, which is one of Scotland’s largest employers.

The SLTA recently completed a survey of over 600 outlets, representing over 10% of Scotland’s on-trade, ranging from single outlets in remote tourist locations to owners of multi-site gastro pubs and bars in city centres.

The survey showed new drink driving regulations are having a significant negative impact, with 55% of all outlets surveyed showing a decline in like for like sales in 2015 vs 2014.

Not just alcohol sales…

The impact extends beyond alcohol sales and is adversely impacting Scotland’s growing food sector, with 38% of outlets reporting a decline year on year, as people were simply avoiding visiting their outlets.  The biggest impact was in countryside and tourist locations, where 39% of retailers were reporting a decline of over 10% year on year.

Waterson added: “Pubs, Bars and Hotels play a prominent role is supporting tourism and many of our respondents are concerned about the viability of their businesses and the impact on local economies.”

Confidence amongst small and large business owners in the sector is also low, with only 18% saying they expect to see any growth in the rest of 2015.

With less people going into outlets there is also a negative impact on Scotland’s growing craft beer and spirit sector.

Waterson said: “It’s great to see so many new entrants in this sector, but tourists and overseas buyers expect to see these businesses flourish domestically, and if more businesses close, they simply won’t be there.”

Biggest threat: Scottish Government Legislation

66% of outlets said the biggest single threat to their business was Scottish Government Legislation. This figure was more than 4 times higher than any other threats such as competition or off trade pricing, and is the same level as the SLTA’s February Survey. On this matter, Waterson commented:  “If anyone thought the threat would dissipate over time, they are wrong, which is why we need support.”

Very worrying

On the survey results, Paul Waterson Chief Executive, of the SLTA said: “These results, which mirror other earlier trade surveys, are very worrying. The fight is on for the entrepreneurs and business owners who employ over 60,000 people in Scotland. More retailers are joining our organisation, as their customers are now afraid to stop and have one drink at their local on the way home from work, and many who take the family out for a mid-week bite or Sunday lunch, aren’t coming in at all. People worried about driving with small residual amounts of alcohol in their bloodstream after a night out is having the most significant effect on stopping people coming into our premises of an evening.

Increased costs need to be offset by savings

“In addition, if the government is looking to increase minimum wages, they need to recognise the economics of our industry. Wages are typically 30% + of our cost base and our businesses cannot cope with increased costs unless they are offset by other tax savings. For a small business making 8 or 9% profit, an increased wage bill will reduce profits to 2 or 3%. If interest rates go up without a concession elsewhere, the business simply cannot survive.”

Closure rate will rise

Waterson continued: “Our pubs and bars are at the centre of many economies and communities across Scotland. If more businesses close, we will see less facilities for tourists, higher prices in hotels and increased unemployment.   People can be very dismissive of the impact of individual pub closures, but this isn’t about one or two outlets employing 5 or 6 people. Last year, before the change to the drink driving regulations, we had 6 or 7 closures every week, with 30 or 40 job losses, over a year this runs into thousands. That closure rate looks like it will rise this year.”

“We are now asking Government officials in Holyrood and Westminster to meet with us, and come up with practical solutions to alleviate the impact on our sector and the high number of potential job losses.”

Article Source: Hospitality & Catering News