Research suggests light at the end of the tunnel for pubs

By Rob Willock

- Last updated on GMT

Related tags Pubs Contract

Willock: "There is no magic wand that will lift struggling licensees out of poverty more effectively than economic recovery"
Willock: "There is no magic wand that will lift struggling licensees out of poverty more effectively than economic recovery"
I’ve studied two new and interesting pieces of research this week that purport to add to the debate about the future of Britain’s pubs and publicans, says PMA editor Rob Willock.

The first is from Mintel exploring pub visiting and pub catering. It is a reasonably positive report, with a cautiously optimistic vision of the future of the pub industry.

It notes the long-term decline in the number of pubs in the UK, but adds: “The now-streamlined industry should be better equipped to thrive in the longer term, with the current total estate of around 50,000 pubs sufficient to serve the UK’s ageing population.”

The report makes repeated Darwinian references to the survival of the fittest, arguing that the recent market contraction has left a smaller pub population in better shape to take advantage of opportunities and weather future threats.

“It appears that the worst is over,” says Mintel, adding that it expects the net closure rate of pubs to slow down to less than 10 per week within the next couple of years and even to reach a tipping point by 2017 “when net openings nudge ahead of closures”.

Price continues to be an important factor in people’s choice of pubs, but Mintel finds that — as a deterrent to visiting — it is a lesser consideration than cleanliness, service, atmosphere and décor. Customers will increasingly accept no excuses for poor retail standards in their quest for a cost-effective and enjoyable experience.

Mintel argues: “Rather than laying the blame externally, pubs should be looking to matters within their control.”

Tough message
How does that conclusion chime with the main thrust of the other piece of research that crossed my desk this week — the CAMRA/CGA study that finds 60% of licensees with a tied pub from one of the big tenanted/leased pubcos earn less than £10,000 a year.

It’s a tough message — even if it is true — to say to someone mentally drained from slaving away for under £3.21 an hour that only they hold the key to turning around their fortunes. They’re probably beyond the self-help manual by this stage and in need of either rescuing properly or putting out of their misery.

It can’t be right that so many pub licensees are earning sub-minimum wage incomes. But the pub industry is operating in a new reality — quite different to that of 2007 (pre-recession and pre-smoking ban).

According to Mintel, there is £4.4bn a year less money being spent in pubs now than five years ago — that’s around £80,000 per pub (even taking into account the fact there are 6,000 fewer pubs).

The Government’s proposals for a statutory code suggest a value transfer from pubcos to tied tenants of around £100m a year — equivalent to between £4,000 and £5,000 per pub.

While I am sure an extra few grand a year would be welcomed by licensees on the breadline, that money in itself (which, if pocketed, would take them to an equivalent of up to £4.81 per hour and which, if invested wisely, might generate a little more) is not going to solve their problems if their businesses are fundamentally unviable.

There is no magic wand that will lift struggling licensees out of poverty more effectively than economic recovery and continued efforts to make their pubs attractive to customers with disposable income.

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