Mark Kenyon: The makings of a good pub

This industry is one that you have to love and be passionate about. You also need to have a determination to overcome the challenges, otherwise you very quickly want to get out. Pressure can mount quickly as huge numbers of people visit their local every day and become ever more demanding.

So what were the key ingredients of a good pub in 2008?

1. good-value food offerings;

2. strong ranges of beers and ales;

3. a palatable selection of wines and spirits;

4. facilities for smokers so they don¹t get cold and wet;

5. the fabric of the place, the licensee and their team;

6. barstaff who offer a warm and friendly welcome, led by the example of a hands-on licensee.

All the above constitute a strong proposition which will make the difference. If the offering is good the experience the paying public receives will be so outstanding they will return time and time again. It was the offer that had to be right in 2008 and so it will have to be again in 2009. The industry has to adapt to market conditions this year even more than last year; external help will be limited. Admiral Taverns¹ recent announcement that it is going to run its business differently is a case in point.

Many operators in the latter part of 2008 saw footfall remain strong, but customers¹ weaker spending power was felt. Then there were increases in food and energy costs and the cost of offering entertainment in pubs was another hot topic, together with off-trade promotions.

These issues combined to create one of the most challenging years for the licensed trade, contributing to high-profile closures in the sector, with experienced operators and those a little newer to the trade having to make difficult decisions about how to maintain margins and generate profit/cash.

Firstly, the challenges. The closure of pubs could continue as discretionary spending weakens, while the industry¹s ability to recruit quality people may also be negatively impacted due to industry uncertainty. These challenges will be compounded if off-trade pricing continues to be used as a loss-leader, and the duty rises planned in May are confirmed. Rising unemployment will not help.

There are also many opportunities, particularly if the sector speaks with one voice. In most communities the local pub remains a hub and it is important to remember that people will still visit bars and pubs, particularly those establishments that take the time to really understand their market in the current economic climate and innovate accordingly.

Minimum pricing per unit of alcohol, historically low interest rates and easing inflation will also offer some good news. Real ale is another good news story.

As for the world of banking in 2009? Viable businesses are still going to attract bank support. Barclays Commercial Bank¹s approach to lending to the licensed trade has always been consistent. We look for the businesses¹ ability to generate sustainable cashflow, a proven ability to service debt and, very importantly, having a management team which will drive the business forward and execute strategy, even in difficult times.

Last year saw a tough marketplace with challenging trading conditions ­ 2008 was hard. The Christmas cash cow may not be the same as seen in recent years and the winners, so far, have been the freehouses, selling real ale. Those pub visitors who have reduced their trips, their consumption and have reacted to the off-trade marketing promotions need to be tempted back by the atmosphere generated in a traditional British pub, which can¹t be bottled or canned.

Mark Kenyon is head of licensed trade, Barclays Commercial Bank​