Can the British pub survive?
Eighteen pubs are closing every week, so how can landlords stop theirs from being the next to go?
According to figures published last month, eighteen British pubs are closing down every week. The rate is speeding up: this time last year there were twelve pubs closing every week. The Campaign for Real Ale (CAMRA) claims that 450 pubs have closed since March this year and around 6,000 have stopped trading since 2008.
Broadcaster Tony Livesey delved into this problem on Monday night (3rd December 2012) in his show on BBC Radio 5 Live, and provided some fascinating insight into its causes, as well as exploring some potential solutions.
No publican's darling
Firstly, some context. The decline of the British pub can easily be traced back to March 2008, when the then Chancellor Alistair Darling introduced what's become known as the beer duty escalator. This immediately increased alcohol duty by 6 per cent above the rate of inflation and stipulated that the duty would increase by 2 per cent above inflation every year until 2014/15.
This means that the current rate of tax on a pint of beer is around 32 per cent to 38 per cent, depending on how much a pub chooses to charge. This brings the rate back to similar levels to the mid-1980s - but back then, pretty much all the alcohol we drank in the UK was drunk in pubs. Today, owing largely to social changes and dirt cheap alcohol prices in supermarkets, the pub is the location of less then half our booze consumption.
This means a lower turnover for landlords and lower profit margins on beer sold. This is a dangerous combination that in many cases can only lead to one thing: closure.
Turning the tide
A decline in patronage and in increase in taxation means a lower turnover and lower margins. This is a dangerous combination that in many cases can only lead to one thing: closure
So, what can landlords do to stop their pub from becoming the next victim of this epidemic?
Assuming that little can be done about the tax situation (although CAMRA have set up a government petition against the beer duty escalator), clearly the number of punters that go to pubs needs to increase - and the costs involved in running a pub need to decrease so that a higher percentage of a pint goes to profit.
That's easier said than done, of course.
Many believe that putting a minimum price on alcohol bought in shops would bring people back to the pub because drinking at home would become less attractive. That may be so - but it's certainly up for debate and, moreover, it won't happen anytime soon because supermarkets are not going to stop selling alcohol at bargain prices, often as a loss leader, without a fight.
In the meantime, it's up to landlords to bring more people through the doors more often.
Themed evenings are not for every pub, but many may look to take advantage of the recently-passed Live Music Act, which states that venues in England in Wales with a capacity of under 200 people will no longer need a license to host live music. This cutting of red tape means that pubs can more easily explore the possibility of hosting music events with a view to attracting more customers.
On Livesey's show, Louise Dinnes, the owner of The Black Swan in Ravenstonedale, Cumbria, explained that her and her husband's aim since taking over the pub was to give people as many reasons as possible to visit. Décor, ambience, friendliness, good beer, good food and honest prices have all contributed to a thriving business, but the main extra revenue has come from taking the opportunity to incorporate into the premises a small grocery store and bedrooms for overnight visitors.
Of course, these additions are only viable in the right circumstances, but they demonstrate that landlords need to be ultra-imaginative and proactive to attract both regular punters and one-off visitors - and make sure that one group is not alienated by the other. Taking measures to attract a diverse demographic is clearly a good starting point.
When one of the show's reporters asked Alan Butcher, the landlord of the Donkey & Buskins in Layer de la Haye, Essex, whether scrapping the beer duty escalator would ease his current difficulties, Butcher replied, "Everything would help."
I'm sure landlords up and down the country - who are trying to maximise the number of pence per pound taken that make it to profit - would echo those sentiments.
Well, help is precisely what we offer at Make It Cheaper. For pubs, there's a very good chance we can save them a significant amount of money on business gas and business electricity bills, get them a better pub insurance package, reduce their chip & pin payments and reduce the price they pay for their broadband and landline. The Manor Arms in South London, for example, recently used our free and impartial service to renegotiate its energy bills with British Gas and switch its merchant services supplier to save around £8,500 a year. That's £8,500 that goes a long way towards softening the blow of increased taxation and declining trade.
Image credit: Matthew Black
Kevin is the Brand Communications Manager at Make It Cheaper, so he makes sure people know who we are, what we do and how we do it. He's from a family of small business owners (his dad runs a chippy, mum a dancing school, uncle a scaffolding company, auntie a fancy dress shop), so he's passionate about making it easier for customers to run their businesses. He spends lots of his time making our letters and emails easy to understand, nice to look at and a pleasure to read. You can email Kevin at firstname.lastname@example.org
- Why are businesses never part of the story when energy prices go up?
- Small store survival and the business costs scourge
- ITVs Mrs Biggs shows that late business payments led to Great Train Robbery
- Let’s not get too carried away by talk of an energy price freeze
- Blue sky thinking: how pubs can boom in the summertime