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Curmudgeon's "Opening Times" Column - February 2008
The pub company business model is falling apart in the face of harsh economic realities SOME YEARS AGO I expressed the view that the giant pub companies that had taken over from the unlamented “Big Six” brewers did not have a long-term future. Their lack of branding meant they had no identity in the eye of the consumer and they seemed to be focused more on property investment than actually running pubs. For a long time they seemed to defy this prediction, doing deals to merge and shuffle their portfolios while constantly “churning” the bottom end of their estates. But this was all in an era of economic growth. Now, when the effects of the economic downturn have been compounded by the awful summer and the smoking ban, their chickens are coming home to roost, something reflected by the fact that the share prices of some of the major pubcos have halved since the middle of 2007. In more and more cases, the high lease payments that could be supported in the good times do not allow licensees to make a living once business has turned down. So we see licensees quitting the trade, or even going bankrupt, and nobody being willing to take on the pub at the same inflated level. Often this leads to a pub being closed for an extended period of time and eventually either being let at a much lower rate or sold off, often to be delicensed and closed forever. I can think of several pubs around this area that don’t to my mind seem inherently unviable which have been closed for months. This must damage trade in the long term as regular customers will either go elsewhere or get used to staying at home. In contrast, a local brewery or a small independent pub company would do their best to keep the pub trading, perhaps by putting in a temporary tenant. This approach also leaves the pub companies wide open to being outfooted by smaller, nimbler operators. This kind of action clearly shows that the pub companies see themselves as property dealers first and retailers second. It is no good for the pubs themselves, no good for local communities and in the long run no good for their overall business. While there is a future for branded chain pubs I still believe that eventually we will see the sprawling unbranded leased estates disappear, either to be broken up into smaller companies that are closer to local markets, or to retreat purely into property ownership and get out completely from any pretence that they are retailers.
Image and reality of pubs are growing ever further apart I RECENTLY found myself in a pub that ticked a lot of the right boxes. There was a variety of small rooms, real fires burning in the grates, real ale from an independent brewery on the bar, a good mix of locals and visitors from further afield, including people of all ages, a number eating meals but not enough to overwhelm the place, and a friendly, welcoming atmosphere throughout. But it struck me that, even though this is the image of pubs that most people still have in their mind's eye, all too often the reality is very different. You’re far more likely to find a mock-rustic dining establishment that looks down its nose at the casual drinker, a garish chrome and glass theme bar or a pub that can’t even be bothered opening most of the time. While there are still thriving real pubs to be found, their numbers are steadily falling, and the popular image of a pub as a cosy, welcoming haven for all comers, which still persists as a media stereotype, bears less and less relation to what you’re actually likely to find when venturing through the door. |