It’s been heralded as the solution to struggling low-pay earners but increasing numbers of big players in the hospitality industry have hinted that they expect to raise their prices following the rising living wage.
The hourly rate is due to come into effect from April 2016 and will see the minimum wage raised from the current £6.70 for over 25 year olds to £7.20 per hour for this age group. As a result, many big pub chains have announced plans for price rises, with more hinting at the possibility.
Whitbread, JD Wetherspoons and Mitchells & Butlers have all warned of this cost increase being passed onto the consumer, with an estimated half of employees over 25 in each organisation. The latter owns a number of well-known pubs, including Lauder and the Horseshoe Bar in Glasgow, employing around 44,000 throughout their establishments.
Mitchells & Butlers plan to postpone dividend payouts until 2018 in order to accommodate costs. While it’s possible that more big players will pass on costs to shareholders consumers are likely to bear the brunt first. Where exactly is debatable. As the wage rise is so well publicised it might be a savvy move for publicans to maintain current alcohol prices as much as possible and cut back elsewhere in order to maintain consumer confidence. Streamlining staffing levels and finding efficiencies elsewhere in the business could avert more loss of custom.
Our pubs and clubs suffered a loss of income following the introduction of new drink driving laws – we can only hope that they can absorb an increased wage bill without more closing their doors.