The pubcos and the 'real economy'

Nothing excites some pub industry watchers like the prospect of a big player going belly up. But apart from the odd firebrand licensee few people I speak to realistically expect the big pubcos to go under any time soon, even in today's dog's dinner of a trading environment.

Then again, a year ago you'd have been sent to the nuthouse for suggesting the likes of HBoS would be close to collapse within 12 months, or that we taxpayers would become majority shareholders in most of the UK's leading banks in order to stop us all going down the financial toilet.

Of course it is true that events guiding the global and domestic banking fraternities are considerably more complex than those affecting pub companies. But the point that nothing in this day and age is sacred is one worth bearing in mind.

As the UK financial system steps back from the abyss - for now - attention is turning to what is termed the 'real' economy. With unemployment rising at record-breaking levels consumers, fearful for their livelihoods, will seriously curb their non-essential spending.

How pub operators respond to this dynamic shift will determine who survives and who doesn't. Reasonably upbeat trading news from Whitbread and Marston's last week and Mitchells & Butlers a few weeks back emphasised the push towards value-for-money offers, albeit not at the expense of a quality environment in which to serve them.

There is also much talk of support for tenants in today's tough market. Notably Marston's has highlighted the need to run "sustainable businesses in which risk and reward are shared".

Many believe 2008 will look like a picnic compared with what 2009 has in store. If true, one can only hope that both sides of the landlord/tenant arrangement work together as much as possible. For all our sakes.