Pub giant Fuller's urges chancellor to rethink budget amid soaring costs

In a stark warning to the government, the executive chairman of Fuller Smith & Turner has urged Chancellor Rachel Reeves to deliver "fresh ideas" on stimulating growth in the pub sector, arguing that the industry cannot be taxed into prosperity. Simon Emeny's comments come as Fuller's reports robust half-year results, yet highlights the mounting pressures facing hospitality businesses amid rising costs and economic uncertainty.

Fuller's, which operates 151 tenanted inns and 185 managed pubs and hotels with over 1,028 bedrooms, revealed revenues of £207.5 million for the six months to 27 September 2025, marking a significant uplift from the previous year. Like-for-like sales grew by 4.6 per cent, driven by a 6.5 per cent increase in drink sales, while food and accommodation saw rises of 2 per cent and 3.3 per cent respectively. Adjusted pre-tax profits surged 28 per cent to £22.5 million, buoyed by continued investment in its estate, including £13.5 million spent in the first half to enhance hotel occupancy rates to 81 per cent and revenue per available room to £115.76.

However, on a statutory basis, profits dipped to £21.1 million from £29 million a year earlier, partly due to a £17.2 million profit from the sale of The Mad Hatter hotel in Southwark. The company has declared an interim dividend of 7.85p, a 6 per cent increase, signalling confidence in its future despite headwinds. Emeny noted that Christmas bookings are already 16 per cent ahead of last year, slightly surpassing management's expectations, and expressed optimism about acquisition opportunities in a fragmented market.

Yet, beneath this positive trading update lies a deeper concern for the sector's sustainability. Emeny criticised the government's approach, stating: "For the country to be prosperous again and to ultimately stop taxing everybody to oblivion, we need to have some meaningful economic growth." He pointed to the £8 million annual cost increase inflicted on Fuller's by this year's rises in employers' national insurance contributions and the national minimum wage, warning that such measures are eroding profitability across the hospitality industry.

This sentiment echoes broader fears as the Autumn Budget looms on 26 November 2025. Reports suggest Reeves may hike alcohol duties further, a move that could exacerbate the pricing gap between pubs and supermarkets, potentially driving more closures. Emeny lamented the "lack of a clear plan" from Labour to foster growth, emphasising the need for "ambitious and innovative ways" to support businesses. He added that many pubs are resorting to shorter opening hours or fewer trading days to manage costs, which ultimately reduces tax revenues for the Treasury—a counterproductive cycle that questions the efficacy of current fiscal policies.

Analysts at Peel Hunt have upgraded their profit forecasts for Fuller's by 10 per cent for 2026, citing a "good chance" of further upgrades depending on Budget outcomes. Shares in the company, founded in 1845 to run the Griffin Brewery in Chiswick, rose 3.9 per cent to 646p by mid-afternoon on the day of the results announcement.

For hospitality operators, from pub chains to fish and chip shops, these developments raise critical questions: Can the sector withstand another round of tax hikes without stifling innovation and investment? And how might "fresh ideas" from the Chancellor—perhaps incentives for sustainable growth or relief on business rates—reshape the competitive landscape? As insolvencies in pubs and bars hit a two-decade high of 449 in the first 10 months of 2025, the Budget could prove a pivotal moment for an industry already reeling from post-Covid debts and escalating operational expenses.

Fuller's story serves as a microcosm of the hospitality sector's resilience and vulnerabilities, prompting business leaders to consider strategic adaptations, such as premium offerings or portfolio diversification, to navigate an increasingly taxing environment.