Pub closures set to accelerate, says accountancy firm

PricewaterhouseCoopers (PWC), the firm of accountants, expects pub closures to accelerate beyond its own predictions as the smoking ban and consumer squeeze tighten their grip on the sector.

The firm believes 6,000 pubs will close in the next five years if they "do not take definite steps to address the impact of the ban and squeeze on consumer spend", with 2,000 of these closing this year alone.

PWC said it was revising its 2007 prediction of 5,000 pub closures by 2012 after 1,200 had shut for good last year, double the 700 closures in 2006.

Martin Jervis, partner, Advisory at PWC said now was the time for pub owners to "take a long hard look at their businesses and make some difficult decisions around their future strategy".

Jervis said companies should "recognise loss-making trends early and deal with them in the appropriate way, for example through sale or closure".

Shareholders in large pubcos, Jervis went on, "should take a look at their management teams and ask whether they have the skills to manage through a crisis? If they don't, they should consider bringing in new or interim turnaround management specifically to implement profit improvement, loss elimination and closure programmes, allowing existing managers to concentrate on the good parts of the estate and keeping those moving ahead".

"If it really is too late and the loss making outlets are in danger of jeopardising the value of the whole group, consider restructuring solutions such as pre-packaged administrations and accelerated merger and acquisitions.

"Such methods can protect a business and in some cases deliver value, but they need to very carefully planned and managed, with all stakeholders- employees, suppliers, bankers, private and public equity and landlords," he added.