The fight to secure the pub's future

Pubs are continuing to close at an alarming rate – 76 pubs a month shut up shop last year, a total of 914 during the 2018 calendar year, it was claimed.

Retail estate adviser Altus Group’s annual business rates review discovered that on 1 January 2019, the total number of pubs in England and Wales, liable for business rates, fell to 41,536 with the overall number declining by 1,530 since the business rates revaluation on 1 April 2017.

UKHospitality boss Kate Nicholls said pubs were being slapped with a plethora of cost pressures at a time of unprecedented political uncertainty and unstable consumer confidence.

Demolition rate reduced​

However, Altus Group claimed the rate pubs are disappearing due to being demolished or converted into other types of use has eased significantly.

Between April 2010 and April 2017, 11,608 pubs were either demolished or converted into other types of use with the number of pubs falling from 54,674 to 43,066 – equating to about 138 a month.

Altus Group president of expert services Alex Probyn said: “The increase in the thresholds at which businesses, such as pubs, pay business rates coupled with the pubs’ discount during the past two years has helped ease the decline.

“The new retail discount, which has slashed rates bills by a third for high street firms with a rateable value of less than £51,000 from 1 April will help independent licensees in small premises and should stem the decline even further.”

Triple whammy​

Figures released in March last year found 18 pubs a week were closing due to a triple whammy of high beer duty, rising business rates and VAT.

The data, which claimed one third of the cost of a pub pint is now made up of various taxes, was revealed by consumer organisation the Campaign For Real Ale (CAMRA), which is calling on the Government to take urgent action to cut the tax burden on pubs.

The group said while temporary business rates relief and a beer duty freeze have been welcome, the Government needs to review the tax system.

It added that Britain’s departure from the European Union provides new opportunities to support pubs, such as the potential for lower rates of tax for draught beer sold in pubs.

The survey found, during the period from July to December 2017, that the south-east saw the largest number of pubs close with 62.

Celebrate the positivity​

It also found that the second half of 2017 saw fewer pub closures than the first six months of the year, when 20 pubs a week closed, on average.

Following this, the Long Live the Local campaign launched in July 2018 in a bid to celebrate the positive role pubs play in communities and to highlight the jeopardy they face from a range of tax pressures.

Programme director David Cunningham outlined exactly how this triple whammy impacted the number of pubs shutting their doors for good.

Costs rising​

He said: “These closures are, in part, driven by high and sustained operating cost increases such as employment costs, food and drink cost inflation and disproportionately high taxes including beer duty, business rates and VAT.

“These costs are squeezing margins, making it difficult for some pubs to invest and adapt to meet customers’ changing needs or, in some cases, making the pub unviable.

“Pubs are overtaxed with £1 in every £3 spent in a pub going to the taxman, resulting in an average pub paying £140,000 in tax. Further planned increases in beer duty in the Autumn Budget, and every year for the foreseeable future, will make this even higher.

“UK beer duty is three times higher than the European average and 11 times higher than in Germany and Spain.

“Every pint of 5% ABV beer sold in the UK incurs 54p in beer duty – the same pint in Germany would incur only 5p. With seven in every 10 alcoholic drinks served in a pub being beer, pubs are disproportionately impacted by these increases.”

Difficult dilemma​

He went on to explain that faced with the increasing cost pressures, licensees have to either put their prices up or drop their margins but both these options can make a pub unviable.

Cunningham added: “Increasing prices risks losing customers – recent research found that more than one third (36%) go to the pub less often than they did five years ago and more than half (53%) think that drinking in pubs has become less affordable for them compared to five years ago.

“When we faced the Government’s beer duty escalator policy between 2008 and 2012, beer duty increased by 42%. During those five years, beer sales fell 16% overall, but by 23% in the on-trade, 5,000 pubs closed and 58,000 jobs were lost.

“Long Live The Local is a rallying call to Government to recognise pubs are a force for good and play a vital role in our communities, culture and economy and as a result, require their support to help them to survive and thrive.”

Turn a pub around​

Turning a failing pub into a successful one isn’t plain sailing but Cunningham outlined some simple, yet effective, ways in which operators can do this.

He said: “This is far easier to say than to do, and requires a lot of vision, passion and sheer hard work. There are,

however, many individual publicans, pub groups and communities showing that it can be done – the Pheasant in Neeton, Shropshire, as featured in the My Pub section (see p44), being just one great example.”

The Pheasant closed in 2006 when the former owners retired but a community benefit society took over in 2013 a bid to create a thriving pub once again.

At this time, the village didn’t have much infrastructure. It wasn’t served by a shop, village hall, school or post office, meaning locals were keen to get a community hub back to the area.

Community benefit​

Now headed by Sarah Cowley and Mark Harris, the pub has an annual turnover of more than £550,000 with a strong customer base including 40% of diners driving more than five miles to get there and 40% from over 10 miles away, making it a firm favourite for locals and visitors.

Neenton Community Society owns the pub – a community benefit with about 100 members, which was formed to regenerate the area by restoring the pub as a social and economic hub.

All money earned by the pub goes towards regenerating the area.

Examples include providing jobs and training, and creating social and recreational facilities.

Cowley said the pub had given the village a heart and a future again. Each of the 15 members of staff live within a few miles.

Liaising with the local community is something Cunningham mentioned when explaining how to make a pub successful.

Meeting needs​

He said: “It starts with understanding the needs of the local community and what other operators are offering to ensure the pub is what people want and different to what is already on offer.

“Successful pubs have to appeal to as a wide a range of demographics as possible – male and female, older and young, drinkers and non-drinkers.

“Pubs need to provide a relevant offer for all day-parts and, above all, offer something that cannot be matched at home or anywhere else.

“With strong competition from other eating, drinking and entertainment venues – as well as the increasing appeal and value for money that staying at home offers – people are looking for places that provide a unique experience and atmosphere. Pubs are proving they can be such places.”

Six key ingredients​

In summary, Cunningham gave operators a handful of top tips, which can help turn a pub around to make it thrive again.

“Our research showed that pubgoers believed there were six vital ingredients that made a great pub,” he said.

“One is a friendly welcome. Two is a great range of well sourced beer and other drinks. Thirdly, a great atmosphere. It also needs good food, a variety of regular events and a well-kept beer garden.

“The most important of all of these though was the warm and friendly welcome clearly indicating that the most important ingredient of all for a successful pub is the publican and their staff.”

While the past looked bleak for the pub trade thanks to the constant closures, operators who keep their passion ablaze with customers at heart of the business can be successful.