“Hospitality is in crisis” – Brewdog CEO speaks out after living wage controversy

The headline-grabbing beer brand Brewdog has hit back at criticism of the firm avoiding a voluntary pay rise to provide a living wage for employees. CEO James Watt shared a long post to his X (formerly Twitter) social media account this afternoon, describing the news as “falsely reported”.

Citing the severe pressure the hospitality industry is currently under, Watt refuted claims that his staff would receive a pay cut. Instead, he argued that the company was simply unable to afford the upcoming rise in the Real Living Wage (RLW). 

The RLW is a voluntary rate of pay that is higher than the legal minimum wage. From April 1, it will increase to £12 per hour for those aged 21 and over. The change is being argued by some as a potential nail in the coffin for UK hospitality firms, thousands of which are already facing closure.

Brewdog defends employee pay

Last Friday, major news outlets including BBC News reported that Brewdog, the craft beer giant, will no longer pay its employees the real living wage.

Some Brewdog staff will instead receive the UK government’s National Minimum Wage (NMW) of £11.44 an hour from April – below the £12 cost of living-based rate.

Critics have derided the move, saying it goes against company values. Founders James Watt and Martin Dickie had paid the voluntary wage since 2015.

Among dissenting voices is Bryan Simpson, organiser of the hospitality union Unite. Simpson said: “To withdraw the real living wage now, during the most acute cost of living crisis in a generation, is outrageous.”

However, in Watt’s social media post, he argues that retaining a Real Living Wage salary would require an increase in staffing costs of 26%; an amount that would jeopardise “the long-term viability of our business.”

“No nationwide companies in hospitality have [Real Living Wage] status, to the best of our knowledge,” Watt added. “We are working as hard as we can to protect jobs and keep all of our bars open whilst offering market leading packages to our brilliant people.”

Last week was an incredibly tough week at @BrewDog at a time when our focus is on protecting jobs whilst providing best in class packages for our teams.

If you saw the media storm last week (and let's be honest – it would have been hard not to) you would be forgiven for… pic.twitter.com/2wJRho2FNT

— James Watt (@BrewDogJames) January 15, 2024

Hospitality unable to meet pay demands

The new national minimum wage, while seemingly good news for employees, has played havoc with retail and hospitality cash flow planning and management.

Based on the revised rates, a full-time 23-year-old employee working 37.5 hours per week will see their annual pre-tax pay jump by over £1,000, reaching around £22,308.

For those already grappling with labour shortages and rising energy costs, the increase to employee payroll this spring may be enough to scuttle thousands of firms struggling to stay afloat – leaving jobless the very people it was set up to support.

An exclusive Startups survey recently reported that 19% of UK bars and restaurants would be unable to meet employee pay expectations in 2024.

Last week, GMB Union added to concerns by revealing that 4,500 pubs owned by Stonegate –  one of the largest pub companies in the UK – could be at risk of closure due to debt troubles.

Commenting on the news, Justin Bowden, GMB Regional Secretary, said: “We fear for the future of our local supermarkets and pubs.”