Stonegate Group
Stonegate faces mounting financial pressures, with rising costs and potential pub sales.

Pubs are central to the UK's social fabric. The Stonegate Group has become Britain's largest operator of pubs, bars, and venues following a series of successful mergers and acquisitions. However, headlines now paint a different picture—one of deep financial distress. The company is considering selling its best assets to ease the mounting debt burden.

TDR Capital, which owns Stonegate, contributed £250 million in 2024 to help secure a refinancing deal. The private equity firm aimed to bolster what it saw as an industry champion. Unfortunately, despite this injection, the pub company recorded significant losses of £214 million in the same year. Its total debt now exceeds £2.2 billion.

Deepening Crisis

Stonegate's financial woes have accelerated, with rising costs outpacing sales. Its financing costs have surged faster than revenue, making the company's position increasingly untenable in 2025. To cope with soaring energy bills and rental prices, the company had to hike beer prices in May.

A potential sale of around 1,030 pubs could raise approximately £1 billion, providing a much-needed lifeline and potentially saving the business. Industry experts warn that the sector is under severe strain.

The Institute of Licensing reports that pubs and the wider hospitality sector face mounting pressure amid tax hikes and closures. UKHospitality data shows the sector was hardest hit by the tax increases announced in last year's Autumn Budget. The Office for National Statistics (ONS) reported 164,641 job losses in the sector over the same period—accounting for 53 per cent of the national total.

Emma McClarkin, chief executive of the British Beer and Pub Association, stated in August 2025: 'Pubs and brewers are important employers and have real social value. But this is a really sad pattern, and unfortunately, a lot of these pubs never come back.'

Industry leaders are urging the government to reverse recent changes to National Insurance contributions to prevent further decline in the sector.

Plea for Help

UKHospitality and business owners recently sent an open letter to Chancellor Rachel Reeves, emphasising the sector's plight. The letter stated: 'Today, hospitality has the highest tax bill in the economy. The impact has been immediate, concentrated, and socially regressive.'

Kate Nicholls, chair of UKHospitality, highlighted the urgency: 'This extraordinary coalition demonstrates the united view of hospitality that there needs to be urgent action at the Budget. From pubs, restaurants, and hotels to leisure parks, visitor attractions, and contract catering, hospitality is being taxed out.'

Wrong Impression?

The COVID-19 pandemic severely impacted the industry. This hardship followed Stonegate's acquisition of rival Ei in 2019 for £1.27 billion. For the year ending September 2020, the company posted a loss before taxes of £746 million.

In a recent LinkedIn post, Harry Bailey, Stonegate's head of finance, sought to clarify misconceptions. 'Pubs and the hospitality industry are in the spotlight at the moment as we countdown to the Chancellor's Budget on 26 November,' he said.

Bailey emphasised that even busy pubs are not cash cows. Every single pound taken is a battle in the current climate, he explained, revealing that profit margins are far narrower than many realise.

Economic Sense

Stonegate has yet to confirm whether a review of its pubs is ongoing for potential sale. CEO David McDowall addressed the upcoming Budget, stating, 'This isn't special pleading. It's economic sense.' He questioned whether the Chancellor wants a thriving hospitality sector or not.

While no official decision has been announced, the possibility of a sale looms as the company seeks to navigate its financial crisis amid broader industry challenges.

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