Running a pub is hard work, and it's getting harder

Are you keeping staff costs (as a proportion of sales) below those of your peers; have you managed to negotiate competitive utility prices (anything below 4% of your turnover would seem to be a great deal)? What about your marketing and promotional costs — are they providing you with a sufficient return?

And how much are you able to pay into your own personal bank account at the end of the month? If the average divisible balance for small community pubs is £746 a week and, assuming rent accounts for 50% of that, their tenants or lessees are ‘taking home’ £1,616 a month gross or £19,396 over the year. Of course that will often need to be divided between two partners. I don’t even want to imagine the hourly rate that represents. Needless to say, it’s not enough.

Some of you will argue that even these numbers overstate real earnings, because your rent is higher than 50% of your divisible balance. I hear you.

But here’s a fact you won’t disagree with. Running a pub is hard, and it’s getting harder. Costs are rising, regulation is increasing and customers are getting tougher to attract and please.

Pubcos know this too, which is why you can expect to see them launch a raft of initiatives designed to increase support for their tenants and lessees over the coming months and years. Scottish & Newcastle Pub Company — now to be known as Star Pubs & Bars — is a case in point. It is de-risking entry into its pubs, contributing to some initial costs, offering more flexibility on lease terms and allowing assignment earlier in contracts.

This is not altruism, so much as realism, from the pubcos. They need to attract quality operators — people talented enough to have a range of employment and entrepreneurial options to choose from. And frankly they are not going to attract them for £19,396 a year, even if accommodation is included.

Hand-in-hand with increasingly favourable tenancy and lease deals, has come self-regulation of the pubco-tenant relationship. Many of our readers remain deeply cynical about self-regulation — but it is, frankly, too early to cast aspersions on what is undoubtedly a well-meaning process.

Some parties have not thanked the PMA for reminding the Government of its duty to monitor the arrangements and attracting the renewed attentions of business ministers. But feedback to date suggests that there are some teething troubles to address to improve user-friendliness and communications.

For self-regulation to be credible and have industry-wide buy-in, not only must it work, it must be seen to work. And ideally it must have full Government support, based on ministers properly understanding and endorsing the process.

Then ‘Running a Pub’ might become a more attractive and profitable proposition.