Shepherd Neame warns inflation will hit pub margins

Pub operator and brewer Shepherd Neame has welcomed a rebound in sales but warned inflation is continuing to impact its margins.

The group, which runs 302 pubs in Kent and the South East of England, returned to profit in the second half of 2021 despite dealing with a shortage of delivery drivers and issues with the supply chain.

It said there were also staff shortages in "many pubs" and a "dearth of applicants for critical roles such as kitchen staff".

The company said rising inflation and the impending rise in hospitality VAT, the National Minimum Wage and employer’s National Insurance Contributions would continue to impact margins.

Shepherd Neame posted a pre-tax profit of £5.4m in the 26 weeks to 25 December 2021 compared to a loss of £7.2m for the same period a year earlier.

Sales rose 55% to £78.7m and the group paid a dividend for the first time since October 2019.

The company said sales at most of its central London pubs were "near normal" as workers returned to their offices following the lifting of lockdown restrictions.

Jonathan Neame, chief executive of Shepherd Neame, said: “Our business is in good shape and has traded well following the lifting of all restrictions. However, the current economic uncertainties are putting inflationary pressure on the sector which will impact margins.

“We are looking to the future with cautious optimism and are excited about delivering an uninterrupted Easter and summer for the first time in three years.”

Jonathan Swaine, former managing director at Fuller’s, joined Shepherd Neame as director of its pubs division in February ahead of plans to resume growth.

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