Pub closures at 25 a week, sales declining

A new survey has cast further light on the problems facing the UK pub sector, with 45% of licensees reporting a fall in sales in the last year and 25 pubs closing every week.

The public house survey by Jones Lang LaSalle Hotels found that traditional, non-food serving public houses continue to suffer, with 66% reporting a fall in sales over the last 12 months, compared with 63% of food-led pubs, which experienced a rise in sales.

The majority of licensees (34%) cited the fall in disposable income as their main concern.

This was followed by competition from off trade sales (the availability of discounted and cheap supermarket alcohol with people staying in and drinking at home) at 25% and the availability of finance (20%).

Unsurprisingly, pubs in the South of England outperformed those in the North, Wales and Scotland.

Harry Hawksby, director in the licensed leisure and hotels division at Jones Lang LaSalle Hotels, said: "Whilst conditions remain challenging for the UK public house sector, the medium-term outlook is positive, especially in London and the South East.

"The number of public houses closing weekly has also fallen from 37 to 25. There is a general sense of optimism, with the glass being half-full rather than half-empty."

Hawksby said that financing remains a real concern, with little appetite for banks to provide cash due to perceived risks. He said that loan-to-value ratios are typically at only 50%, which is stifling growth in the market.

Despite the challenges currently facing the sector, the report found that 30% of investors expect "notable growth" in the next two years.

It found that confidence in the London market remained high, with 39% of investors identifying the capital as having the strongest potential for real estate growth within the sector.

Hawksby said: "The next twelve months are likely to see the market continue to polarise, with public houses which offer food performing much better than their traditional alcohol-only counterparts. As the market continues to improve we could see an acceleration of public houses being offered for sale as the banks and institutions begin to exit properties which are currently being run in administration."