It's all up to the Government now

By Andrew Pring

- Last updated on GMT

Related tags: Licensees, Government

Pring: No light at end of tunnel
Pring: No light at end of tunnel
There is no light yet at the end of the tunnel, no end in sight of the perfect storm. If help is to come, it must come from the Government, says Andrew Pring.

In the current climate, it's absolutely vital that struggling licensees can cling to some sense of hope that things will eventually get better.

But where do they get that from? Everyone is saying that 2009 will be worse than 2008. The banks are still recovering from their excesses of the past few years and are in no position to bail people out. Energy prices look set to continue skywards. And the Government has absolutely no magic wand to wave at the world's economic woes and make them disappear. So, on the economic front, it looks as if nothing's going to change for the next few years. No hope there, then.

How about on the trading front? Difficult to see any bright spots there, either. Customers are under real pressure too and, to make matters worse, are increasingly resentful of the high prices (food as well as beer) they have to pay when they visit the pub. In fact, it's getting so expensive for an average family to eat out these days that it's hard to see how pubs can tempt family diners unless they're offering very cheap food deals, à la M&B, JD Wetherspoon and Spirit Group's Two For One menu.

All those predictions by industry commentators that Britain would follow the American way and eat out more often than they eat in ring rather hollow now.

It's a new age of austerity and most people will have to start to learn something from all those cooking programmes they watch so slavishly, rather than just drool. Staying in is definitely the new going out.

So where do the vast bulk of the industry's licensees, the tenanted and lessee crowd, look for some form of deliverance? The answer should be, of course, their pubco partner.

If partnership means anything, it should be akin to marriage vows — for richer or poorer, better or worse.

Unfortunately, the major pubcos are not really in a position to offer very much help. Heavily indebted, and with demanding shareholders to keep sweet, their wiggle room is extremely limited.

On offer are rent concessions to licensees they believe deserve it (as long as it's paid back later), and a little bit of beer discount, again just for the favoured few. That's it.

The pubco model is just not built for downturns like this. Its prospects may have been "tested to destruction" when it was at the conceptual stage — but the clever people at Nomura never tested it as hard as it's being tested now.

So who can licensees look to as they try to cling on to their livelihoods?

The answer can only be the Government, belatedly recognising that pubs and brewers are indeed a special case and urgently in need of help.

Paul Wells eloquently argues the case for rate relief and tax breaks in this week's issue. If government could only respond, light would appear at the end of the tunnel.

Related topics: Legislation

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