High street matures as regime beds down

The new licensing regulations are just a little over six months old, but in that time they have had a noticeable effect on behaviour on the town pub and bar circuit.

The 2003 Licensing Act is working out rather well from the Government's point-of-view. In the face of nay-saying from the more reptilian sectors of the popular press, it held firm to the belief that the Act and the introduction of longer hours could engineer positive social change.

Its growing concerns that the Daily Mail might be right in its apocalyptic predictions were also clear when it issued guidance that allowed local authorities and police more freedom to impose themselves on the trade.

But it stuck to the underpinning tenet of the Licensing Act: the pattern of late-night social activity would start to change for the better once people had more options for a late drink.

Many in the industry shared this view but few believed the changes would be so visible so quickly. It seems clear already that longer hours, combined with a tougher regulatory stance from police and local authorities, have taken a substantial amount of steam out of the high-street pub circuit - the embarrassingly visible focus of so much binge-drinking and bad behaviour.

To be fair, the cooling off of the circuit began a few years before the introduction of the Licensing Act. Partnership work between the trade and the police and others deserves a mention in playing a key part in dealing with the problems created when thousands of revellers descended on a pub circuit for a few hours.

A case can be made for dating the heyday of the circuit to around the turn of the millennium when excitement levels, fuelled by unprecedented investment in new venues, were at a peak. The large number of new bars popping up even in the most modestly-sized of market towns drew unparalleled numbers of drinkers to the newly-formed circuits. A higher degree of visibility and buzz was created when planners allowed new bars to line up in the same street like sparrows on a washing line. But things that get hot inevitably cool down.

As investment levels drop off, circuits become familiar and bars become tired, so some customers become less likely to visit them.

Talking to operators, though, there is a definite sense that the introduction of the Licensing Act has caused a shift - a step-change even - in behavioural patterns. It's important to remember that the high-street pub and bar market at weekends is still a huge one. But a range of new behavioural patterns seems to have occurred during the short months of the new era - although, of course, they don't apply to every town and every circuit.

Here are a few: punters seem to be leaving home later; there's a perception that many have had a few more drinks at home or in the suburbs before they arrive on the circuit; there are customers who prefer to stay in their local pub on more occasions now it's opening that bit later; customers are confused because the going-out crowd is more fragmented at weekends and is assembling a bit later - it means that the length of stay in a particular pub mid-evening is shortening in some cases as punters whirl around trying to find the crowd.

Some operators talk about a compression effect later on; customers arrive in large numbers later with overall spend concentrated into a short timeframe. One nightclub operator tells me arrival time has been pushed back an hour. For two hours, his staff struggle to cope with the mass arrival of customers.

There's also no doubt that a new climate of responsibility has settled. Foolish indeed is the operator who doesn't take every possible precaution to check the age of each and every young-looking customer. The stakes are high here. A single mistake or two on this and a licence can be in jeopardy. That's truly scary if you've spent several million pounds opening a city centre nightclub.

Erring on the side of absolute caution can mean turning away dozens and dozens of over-age drinkers who simply can't prove their age. One managed pub chain reported recently that 100 customers were turned away on one Saturday evening because they could not prove their age. It means long delays at the door and long delays at the bar on busy weekend nights. It means alienating a lot of younger, legal customers for the time being as the trade struggles to educate them about the need to carry ID on every visit to the circuit. It means the trade has lost, as it needs to, its "trainee drinkers". It's anybody's guess what percentage of the total crowd these used to make up, but I reckon it must have been around 6% or 7% on a Saturday night. (The downside in social terms is that these youngsters are probably consuming more alcohol now thanks to the cut-price deals that are legion in the off-trade.)

In the past year or two sales information for high-street pubs has become harder to get hold of. Publicly quoted high-street companies such as Yates Group, SFI Group, Inventive Leisure and Urbium have all been taken off the public markets - and, in the case of the first two, consolidated into Laurel Pub Company high-street venues by Robert Tchenguiz's R20 investment vehicle.

But Regent Inns has indicated that life has become harder since licensing reform, with tough new licensing conditions on issues like plastic glasses adding to its problems. I understand, though, that another major operator is claiming that, despite lower footfall in its venues, spend per head has increased by 5%. In other words, a huge positive has been extracted. Its customers have responded to the improved atmosphere and service of its less frenetic venues by spending more. This creates a virtuous circle because higher satisfaction levels are likely to lead to a higher frequency of repeat visits.

For other high-street operators, maintaining sales in the current environment will be an achievement. Even the mighty Mitchells & Butlers, powering away in the suburban dining market, is struggling to keep its sales positive at its late-night venues. It's probably just as well that some of these former high-street companies are privately owned at the moment. Adapting to the current challenging conditions and realities of the high street would have been that bit more painful if they'd stayed publicly listed customers. Six months from here and the like-for-like comparisons are washed through. Nevertheless, the new licensing regime will have reshaped the takings-to-costs matrix on the circuit.