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brewdog pub | accountingweb | Under fire BrewDog defends wage pledge backtrack as row spills over
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Row brewing as BrewDog backtracks on wage pledge

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Famed for its punk approach to business, BrewDog has courted controversy again by reversing its pledge to pay staff the real living wage as it attempts to plug a £24m operating loss.

17th Jan 2024
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BrewDog co-founder James Watt has defended the company’s decision to drop its pledge to pay bar staff the real living wage, arguing that it has to balance the books.

The Scottish company reported a £24m operating loss in June last year, as its results for the financial year to December 2022 revealed its brewing operation had been hit by increased energy costs.

Despite BrewDog taking an active role in the Living Wage Foundation’s campaign to pay workers the “real” living wage, the business told staff it couldn’t pay current or future employees the rate that factors in the ever-increasing cost of living.

The Autumn Statement revealed that the government-set national living wage, separate from the business pledge, will increase from £10.42 to £11.44 in April 2024. 

Wages for those working in BrewDog’s London bars will remain at £11.95 per hour. 

Bottled it

“I would love nothing more than to give everyone in our business a huge pay increase, but we simply have to balance our books, offer fair value to our customers and ensure the long-term viability of our business. And ultimately, protect jobs,” Watt said.

Brewdog’s revenue grew to £321.2m in the 2022/23 financial year, but the firm said the operating loss was due to increased production costs for its most popular product, Punk IPA, along with rising energy bills at its Ellon plant.

According to the Living Wage Foundation, the real living wage at present is £13.15 per hour in London and £12 per hour for the rest of the UK.

Hazy logic

The decision sparked anger from politicians, union Unite Hospitality, and Punks With Purpose, a group of former BrewDog employees, who believe the approach will sour the craft brewer’s appeal.

petition on Megaphone, the nonprofit platform which helps spread the word of workers’ rights, has nearly 20,000 signatures calling for the business to honour the agreement. 

Watt has battled controversy on multiple fronts in recent years from accusations of “toxic” working practices to bad-taste advertising campaigns.

In 2022, the business lost its B Corp status, which certifies a company’s ethical commitment to the environment, community and staff.

Tough times

Watt took to social media to defend his position. He said the criticism following the decision had been “incredibly tough” and had led to the impression “that we pay our fantastic people in the most miserly of ways”.

Watt made several claims to highlight how BrewDog is providing its bar employees, “better” starting packages than “90% of [its] competitors”, wage increases “almost double the UK average” since 2022, and also said that he would be giving “20% of [his] own equity in BrewDog to [its] amazing people over a four-year period”.

“Business is incredibly hard, especially when the UK economy is in such poor health, and sometimes you have to make incredibly difficult decisions,” he said.

“The controversy was because we have only increased our nationwide bar team wages 20.4% since March 2022 and not the 26% that would have been required to retain a Real Living Wage status,” he said.

“No nationwide companies in hospitality… have this status, to the best of our knowledge.”

Scottish media revealed Watt had enjoyed a luxury holiday in the Maldives the month before announcing the wage changes, prompting further condemnation from local politicians who have demanded a meeting.

Never mind the backlash

Simon Cook, business management consultant at Innecto Reward Consulting said the optics look bad for BrewDog, but the issue was more complex than one company’s decision.

“To be accredited as a Living Wage Employer you need commitment from your suppliers to also pay the rate to their staff,” he said. “This could mean they can decide to no longer work with suppliers who pay the living wage to their staff for cheaper alternatives who do not hold the accreditation.”

He said there are “plenty of companies, including many in the hospitality sector”, who sadly do not pay the living wage.

“Brewdog should be credited for many years of ensuring staff at least received a livable wage,” he said. “However, the backlash has highlighted that removing a core commitment to fair pay goes far beyond mere financial savings.”

Robert Power, owner and operational director at Power Forwarding, told AccountingWEB it was unsurprising that BrewDog had experienced a backlash despite keeping up with the pledge since 2015. 

He said from an employer’s point of view, the move allows the company to keep operations competitive “and it will likely financially help them in both the short term and long term”.

“Other businesses keeping up with this voluntary minimum wage may feel less need to compensate employees even more, potentially by cutting back on other bonuses or expenses,” he said. “Furthermore, they might also face less pressure from unions or employees to maintain working conditions.”

Such a decision could also impact talent retention, as employers might know that employees may face a significant salary decrease if they move elsewhere.

“Other companies keeping up with the payment could make a pact together to abstain from increasing pay rates,” Power said. “While this latter point would constitute formal collusion, it has happened before and could happen again.”

Replies (17)

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By Postingcomments
17th Jan 2024 16:57

Virtue signalling works well until you run out of other people's money

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Replying to Postingcomments:
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By FactChecker
17th Jan 2024 19:48

Quite ... the 'other people' being the staff, I take it?

"the company’s decision to drop its pledge to pay bar staff the real living wage, arguing that it has to balance the books ... revealed its brewing operation had been hit by increased energy costs."

Or as staff might see it, James Watt, 'so you are expecting us to subsidise your energy costs out of our (already low) wages'?

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Replying to Postingcomments:
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By AndrewV12
18th Jan 2024 10:42

Stop quoting Maggie.

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Replying to Postingcomments:
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By AndrewV12
18th Jan 2024 10:43

mmmmmm

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the sea otter
By memyself-eye
18th Jan 2024 10:10

Never bought into the 'Brewdog' phenomenon - overpriced, overhyped Keg beer.
I see Tesco are selling 15 cans of Brewdog lager for a tenner - they must be desperate (not Tesco...)

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Replying to memyself-eye:
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By AndrewV12
18th Jan 2024 10:41

IPA is disgusting, it was a marketing miracle to get IPA back on the table of top beers and ales.

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By Duggimon
18th Jan 2024 10:16

"Famed for its punk approach to business"

I would say it's more famed for it's mistreatment of staff and customers alike, hidden behind a strong branding push to label itself as "punk" which the media inexplicably seem to buy in to.

There's nothing in the slightest bit punk about the rampant capitalism and exploitation exhibited by Brewdog, and worse than that their beer isn't very nice.

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By hyper10
18th Jan 2024 10:32

Billionaire Brewdog, the Daily Wails favourite. £24m loss even in the good years whatever profits came in were from smooth accounting around the pub side.
I know someone who is a brew punk or whatever they're called and he never gives up on the big "IPO" coming and it will be a 20 bagger, it's so manic he looks for their products in shops to reassure himself of his coming wealth.
I guess my post would do more good on Reddit than here where I hope people look at things in an objective way.

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Replying to hyper10:
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By JustAnotherUser
18th Jan 2024 12:42

Average Joe who under normal circumstances cannot invest in stocks buys shares in a company (which they love, and they use their products) hoping to make some profit, get excited about his incoming wealth and gets laughed at for his excitement at a return on his investment.

TSG Invested £213 million and no one batts an eye.

Just let people do what they want to do and get enjoyment out of it.

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By AndrewV12
18th Jan 2024 10:39

The Autumn Statement revealed that the government-set national living wage, separate from the business pledge, will increase from £10.42 to £11.44 in April 2024.

According to the Living Wage Foundation, the real living wage at present is £13.15 per hour in London and £12 per hour for the rest of the UK.

crumbs, is this the state of BUISNESS in the UK, a brand CANNOT EVEN AFFORD TO PAY HIS STAFF £12.00 AN HOUR, its only a stones throw from the national minimum wage.

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Replying to AndrewV12:
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By SuperAccountingSteve
18th Jan 2024 11:53

Go read some Thomas Sowell on the pathologies of minimum wage.

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By SuperAccountingSteve
18th Jan 2024 10:42

When socialism (2/3s of the mean wage target for 'minimum') hits reality, its time to crack out a four X.

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By JustAnotherUser
18th Jan 2024 11:55

This story...

A company’s decision to drop its pledge to pay bar staff the real living wage. No current employees wages will drop or be changed.
The company made a loss last year.

Elsewhere...

Thousands of restaurants and pubs closing across UK

https://www.independent.co.uk/news/uk/home-news/hospitality-industry-clo...

WEALTH OF FIVE RICHEST MEN DOUBLES SINCE 2020

https://www.oxfam.org.uk/media/press-releases/wealth-of-five-richest-men...'%20supercharged,increased%20by%20114%20per%20cent.

Insolvencies reach a four-year high for December

https://www.accountingweb.co.uk/business/finance-strategy/insolvencies-r...

Construction companies going bankrupt at the highest rate in a decade

https://www.credit-connect.co.uk/news/commercial-credit-management/const...

why, on an accountants forum are we specifically calling this company out, there's likely 1,000 stories like this, only due to the clicks it will get is accounting web talking about it.

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Replying to JustAnotherUser:
Ivor Windybottom
By Ivor Windybottom
18th Jan 2024 13:01

Maybe it is because of the apparent hypocrisy of the founder, especially after the earlier allegations of bad behaviour.

Yes, there are lots of struggling businesses out there, but mostly their founders are trying to do their best and don't bully their staff.

Brewdog seeks publicity and so has to take the rough with the smooth.

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Replying to Ivor Windybottom:
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By JustAnotherUser
18th Jan 2024 13:53

Brewdog seeks publicity and so has to take the rough with the smooth.

Dont disagree, what's this got to do with a forum for accountants?
but mostly their founders are trying to do their best and don't bully their staff.....

amazing, name me a billion dollar start-up with an absolute angel of a CEO who has never cut a corner, made a mistake or screwed up.

The BBC witch hunt blew this out of the water and there's plenty of on the record of them changing headlines, redacting content and making lies. James isn't perfect, but to my point.... why is this on here... because it gets clicks

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Replying to JustAnotherUser:
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By SuperAccountingSteve
18th Jan 2024 13:08

"wealth of the five richest men doubles" and so does the wealth proportionately of anyone else owning the same shares (Tesla, Amazon, etc).

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paddle steamer
By DJKL
22nd Jan 2024 11:23

My problem with Brew Dog is the strength of some of its beers.

My son left us a case of his "special" purchases from them when he left to move to the US, I just cannot drink it, 10% ABV is too strong so it sits in the box going out of date- to my taste buds their product is ghastly, give me STF Heavy any day.

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