Brewery boss admits ‘dark days’ when he feared for its survival
Chief executive recalls precarious time as Covid pandemic took hold
The boss of Shepherd Neame has admitted there were times during the Covid lockdowns he feared the company may not survive.
Chief executive Jonathan Neame says there were “pretty dark” days as pubs were forced to close their doors for almost six months.
Yet the company has reversed its fortunes after revealing last week it is back in profit and its debt levels are lower than they were pre-pandemic.
Britain’s oldest brewer, which owns dozens of pubs across Maidstone, Malling and the Weald, was hit hard by the restrictions ushered in as the world grappled with the Covid crisis.
Some 80% of its 1,750 staff were put on furlough at the start of the first lockdown and executives forced to take pay cuts of up to 15% as it fought to survive in a market where all its 300-plus pubs and hotels were forced to close.
However, last week it revealed it had posted a pretax profit of £5.4million for the six months leading up to December 25, 2021. That compares to a loss of £7.2m over the same period the year before.
Revenues rose to pre-pandemic levels of £78.7m - up 54.5%.
But Mr Neame admits it had, at times, been a daunting prospect.
When asked if he ever feared the worst and that the company would not be able to see out the challenges it faced he said: “Certainly in that first period I did.
“But then that August 2020 period, when the Eat Out to Help Out scheme was in place and we had some good weather, gave everyone a great boost and demonstrated very strongly that people would put their fears aside and come out.
“We were locked down in Kent from November 5, 2020, to April 12, 2021, which is an astonishingly long period and that was pretty dark, I can tell you.
“The reality of the last two years is we’ve had just six months of restriction-free trading.
“We have not had Christmas, Easter, the May Bank Holiday and that lovely early summer
trading period when people love to go out in pub gardens since 2019. And those are the big trading periods for pubs.
“But, in fairness, I think the government support has been very good and as soon as we reopened the demand was there.
“We had set our sights on this date - the end of March 2022 way back in mid 2020, to see if we could restore the balance sheet, keep the show on the road, and come out of it in a positive form by then.
“And it looks as though we have achieved those objectives.
“It does feel as if the Covid chapter is closed and that we’ve responded to the challenge.”
Yet no sooner does the brewer clear the enormous hurdle of Covid, it now faces a very different challenge as the cost of living looks set to spiral into a crisis amid soaring
It does feel as if the Covid chapter is closed and that we’ve responded to the challenge...
energy bills.
National pub chains have warned of a “tsunami of cost increases” amid rises in not just energy prices, but National Insurance, VAT and the national living wage.
Russia’s invasion of Ukraine has also driven up the cost of barley - a key brewing ingredient - which could see the price of a pint of beer go up by as much as 70p before the end of the year.
“The current situation is volatile and we are monitoring it closely,” said Mr Neame.
“We will do everything we can to mitigate price rises, but as of now it is likely that the price of beer will have to
increase in due course.”
So could our collective tightening of belts see us opt out of a trip to the pub to save some pennies?
“It clearly is a risk,” admits Mr Neame, “but a lot of this depends on consumer confidence.
“House prices are going up, people still have savings, unemployment is very low, and wages are going up at the fastest level for a number of years.
“So there are mitigating forces which will soften this.
“In terms of forward inflation, it is extremely difficult to know what the impact will be.
“The real issue is probably a few months away, in the autumn, when some of those energy prices will really start to bite consumers’ pockets.
“But it’s still entirely possible the market may have stabilised a bit by then.
“We are going to have to take this bit by bit in short bites so in that respect I remain optimistic for the near term but I’m definitely cautious what may happen in the coming winter.”
Problems with supply chains and staff vacancies - which plagued the hospitality industry last summer and into the autumn - have “stabilised” for the firm, although remain far from perfect.
“We’ve had any number of difficulties we did not anticipate on supply chains, on staffing, on inflationary pressures, and we’ve got further challenges to come,” he said.
“But I think the pub model is very robust - more robust than other types of hospitality and I’d include restaurants in that - and what we said perhaps in times of hope rather than expectation during lockdown, was that there is a great human need to communicate face-to-face and socialise over a drink or a meal and I think that is true.”