Thursday, 7 May 2009

30% of pubs need to close

I've talked before about the inevitability of pubs closing. The beer market is shrinking and it is becoming more and more difficult to make money out of pubs.

The other night I had a quantity surveyor in for a drink. Nice chap. He apparently specialises in valuing pubs based on their fair maintainable trade. He recons that around one third of pubs do well as a result of the owners working hard. Another third do OK because the owners work hard and around a third are not viable even though the owners work really hard.

He does admit that an OK pub can be turned around with really good management and maximise potential, although it can easily drop back again with average people.

The most striking comment to me was the fact that there are simply too many pubs and a third are no longer going to achieve the fair maintainable trade that would be sufficient to make the pub viable. It is unfortunate and really a result of changing attitudes of the general public to the pub trade.

11 comments:

Tandleman said...

I think the way he arrives at his figures is a bit broad brush, but he is surely right about the "need" to lose more. Maybe his figures are a bit high at 30%. But maybe not?

Curmudgeon said...

Well, it's a matter of observable fact that the trade in pubs has dropped off considerably over the past 20 years, and so it's inevitable that the market will support fewer of them. There were once over 70,000 in the UK, a figure which has now dropped below 55,000, so in a sense we're well on the way already.

You do have to wonder, though, whether it's wishful thinking to believe that the pub trade can be returned to health by winnowing out the weaker players. That could just as easily lead to a loss of critical mass and an erosion of opportunities for people to visit pubs at all.

We could be in a process of long-term decline that will take us well beyond a 30% drop. It could be in another twenty years' time that the archetypal "mainstream" pub with its mix of age groups and balance between wet and food trade has pretty much totally disappeared, and we are left with just quasi-restaurants, style bars and a handful of specialist beer pubs.

Ed said...

If I remember rightly only recently got to the stage where the majority of booze is now drunk at home. In the US it's 90%. We could have a long way to go :-(

Woolpack Dave said...

Tandleman, I think even he would agree it's broad brush, anecdotal rather than empirical. I think if we got on with the nasty but necessary job of pruning out the dead wood now, we might loose less long term.

Curmugeon, that means I have to disagree with you. If what is left is stronger as a result of releasing resistance to closure, the offer that the remainder provide will be better.

"and we are left with just quasi-restaurants, style bars and a handful of specialist beer pubs." and I rather think that this is what the wider public want, although I think it's a bit more pessimistic than even I think. There will always be room for at least some good pubs. If they are specialist beer pubs then so much the better.....

Ed, there lies some good news, would you believe. In my recent trip to Oregon, there is evidence that in a country where "bars" are more common than our definition of a pub, there is a growing trend of pub like establishments.

The Beer Adventurer said...

Pubs have been changing with the times as long as there has been pubs, and this will continue. The tradional pub as we know it now, is not the same as the traditional pub 50 years ago. Inevitably an awful lot of pubs will go now, but drinking habits will continue to change and new fads will come and go. Good publicans will always find a way to make money!

I used to have a pub in a tiny Herefordshire village that through the years has had 14 different pubs or cider houses... the current owners may will kill off the last remaining one, having more than halved the turnover in their first year.

Brewers Union Local 180 said...

That Oregon thing is something I'd like to comment on, but I believe it is best expressed over a couple rounds rather than in print.

Philip said...

Maybe 30% of pubs should close. Most often businesses close because they do not provide what the customer really wants. I have never come across a pub that has closed that provided good service. I'm not saying there aren't exceptions; I'm saying I've never come across one.

Curmudgeon said...

Dave, that is more of a potential scenario than a prediction, really. On the other hand, it could be said that the good pubs are surprisingly resilient, and the success of Wetherspoon's shows that there is a demand in urban areas for pubs with a mix of age groups and a combination of drinkers and diners.

But closing pubs doesn't necessarily redistribute the trade to other pubs. If you close a petrol station, all the customers will go to another one, but it's not the same with pubs. Customers may stay at home or choose another kind of leisure activity.

Tyson said...

Phillip

I think you have to be careful in making comparisons between general business and the pub trade. Some pubs, or even a lot, may close because they aren't offering a good service, but plenty of good pubs are closing as well. That's what is worrying.

Woolpack Dave said...

Philip, although what you say has a huge amount of truth to it, I'd also have to agree with Tyson. There are many difficulties in providing what this mystical character, The Customer, wants. In reality the customer base for any pub is diverse and increasingly difficult to please.

Any business has to try and deliver a product or service that is wanted, at a price that the customer is prepared to pay and with the costs at a level that provides some profit. Most importantly, within the capabilities of the team.

It is getting harder and harder to do that. Often the reasons why many pubs fall short on delivering an overall acceptable level of service is because costs are being cut to try and just break even.

Most of the costs for a pub are overheads. Maintenance, staff costs, heating and lighting. Sometimes, despite working very, very hard to deliver what our friend The Customer wants, some hard working and sincere publicans just can't make it financially viable.

Woolpack Dave said...

Curmudgeon, I guess you're right on that point. If it is less convenient to get to the pub, then more people will stay at home, but of course that is part of the problem anyway.