Will your local pub be next to close?

Jan 3 2009 by Dan Warburton, The Journal

. . . and it’s going to get even worse in 2009

Depression and recession are altering the pub landscape. Alastair Gilmour offers his barstool opinion to anybody who’ll listen.

THE signs are unmissable on every high street. Development Opportunity. Lease For Sale. High Turnover. It doesn’t take a mastermind to realise the licensed trade is in freefall.

A combination of the 2007 smoking ban and take-home strong, cheap lager has tightened throats and loosened purses to the advantage of the supermarket. Add poor weather over the past two summers, credit crunch debts, personal finance chasms and job insecurity then watch as the bar chart takes a downward spiral.

The most powerful indication that Britain is in a fiscal mess is the boarded-up pub. It matters nothing that many are handsome buildings with flamboyant facades, classical mouldings, priceless stained glass or 150-year-old tiling. The shutters are up and they’ll probably only come down when the business is offloaded to convert into apartments. We were told non-smokers would come back to the pub once the air had cleared. They stayed away. In 2007, pubs closed at 27 a week. In 2008, that increased to 36. In 2009 you can pick a number from 37 to 100.

In the run-up to Christmas, cases of beer from supermarket giants were on offer at three for £20. Each pack held 15 cans; each can contained 440ml.

Even shaky arithmetic can work out that the offer totals 19.8 litres at £1.01 per litre – or 57p a pint. The Red Lion may have its conviviality, the Black Bull its sociable frisson, but if you can ring-pull, fizz, gurgle, gargle, munch – and smoke – while sinking slowly into the contours of a couch potato, you’re laughing.

Anyway, you can be part of the Rovers or the Queen Vic by remote control.

Most big pub companies are merely landlords who offer leases to individuals to operate their pubs – many of whom have redundancy cheques in their back pockets.

They have borrowed massively. They took on huge amounts of securitised, medium-term debt to increase their estate. The level of debt was based upon projected income from tenants’ premiums, their rents, beer profits and gaming machine takings – now the lenders need some of that money back.

With recent beer volumes trading between 12% and 14% down, their ability to service or repay that debt has been impaired.

Despite the doom and gloom, many pubs are doing very well for the time being. They offer quality products in quality surroundings and are nimble enough to turn problems into opportunities. We could name you 36 without drawing breath.

The feeling is though, numbers 37 to 100 are going to contain a few surprises.

Page 3: Floods add to publicans’ many woes