The sad state of the local now

On a recent Sunday afternoon, driving across Derbyshire into Nottinghamshire through familiar towns and villages, a journey I had not made for a while, it dawned on me that many of the pubs along the way were no longer open and trading.

More and more it seems the local family run pubs are slowly but surely disappearing from the landscape. Some of those passed on my trip were closed and covered in security shutters, one had been partially converted to a house, one faced demolition for residential development.

Others had the trade killer "To Let" or "Pub Opportunity" signs of the major pubcos.

I know some of these pubs well; I acquired a couple of them in poor condition for clients in the 90s.

They were refurbished and traded well prior to becoming a part of a much larger pubco, via the consolidation and takeovers of the early part of the century. It seems they have taken 10 years or less to return to where they started.

For the first time in several years, the final quarter of 2007 saw that delight of stockbrokers everywhere, the fall in like-for-like trading across the tenanted pubco sector. Falls of five per cent to 10 per cent compared with 2006 have been reported.

Some might be worse. Rumours abound and share prices have fallen substantially. This year has hardly got off to a good start, accountants, banks and receivers are all very busy.Sudden change

So why this sudden change from the darling of the bull market to the target of the bear market?

Across the UK, lifestyles and social patterns have changed. While eating out in pubs is a growth area, on-trade beer volumes have been sliding year on year, supermarkets sell very cheap beer and there's a credit crunch.

Notwithstanding these problems, there has been one major factor which has impacted seriously on the tenanted sector and most particularly the lower margin, local pub, which has very little food potential, and that, of course, is the smoking ban.

Yes, it's great for everyone who doesn't smoke but many pubs were reliant on the folks that do enjoy a cigarette with a beer - and when they were in their local they quite possibly spent some time playing the fruit machines as well which added to the pubs income.

It is these pubs that are now struggling to survive due to fewer customers who visit less often.

Not everyone can provide an external area to appease the smokers. Combine this fall in trade with lots of leases and tenancies having upward only rent reviews and it's no wonder that some tenants can't stay in business.

Under-invested

Quality properties in the upper end of the Punch, S&NPE, Marston's estates should continue to do well, though they will have to ensure that the food offering is to a good standard and that the staff both front and back of house are able to maintain high levels of food and service, easy to say but not so easy to do.

Companies holding under-invested pubs at the lower end of the scale might do well to look at the real estate angles exploited best by companies such as Admiral Taverns.

There appears to be a cold wind blowing through the plastic smoking shelters.

Many pubs are not in locations suitable for the introduction of a food offering, assuming there is an existing kitchen, and where there is enough regular custom to make it worthwhile.

For those who do not have the skills necessary to introduce an appropriate food offering, or simply those with heavy levels of debt, then the cold wind may be much worse than previously anticipated.

For the record, I am not a smoker, but I do wonder how many smokers have quit and how many are smoking at home with their kids in the house instead? I will miss many of those local pubs where the whole point was to enjoy a chat over a beer and, if there was too much smoke, well I could always leave.

Philip Booth is head of licensed, leisure & hotels at agents GVA Grimley​