OPINION: Innovative financing 'imperative' for pubs

If you can tick all three boxes you will be very successful (such as ours), two out of the three and you'll do OK, one out of the three you will struggle and finally if you don't fit any of these your business will close.

In the current environment the majority of pubs are brewery owned which, in my opinion, puts them at a significant disadvantage to the freehold pubs, of which we are one. This is because the breweries charge the landlord an extortionate amount of rent and also lock them into high pricing on their products which ultimately has to be passed on to the consumer.

Promote small businesses 

Therefore brewery owned pubs quite often only tick one of the boxes which is a good location or food at an okay price in comparison to the area and therefore they struggle in an economic downturn.

What should be happening is breweries should be lowering their rent and offering pricing to struggling pubs and those that operate at the finest margins they can, as this will drive consumers back to the pub.

What I have seen in the seven months since we opened is that customers want to support a local community pub, they really enjoy the atmosphere that’s been built not only with music but openness to talk to one another and the events that we put on such as bring your own cheese night, silent discos, book club, darts team, ghost hunts and kids at the disco. We also offer local beers, spirits and snacks (homemade pork scratchings, local pork pie platter).

The local beers are slightly cheaper than mainstream beers to help promote small business’ such as ourselves also likewise with local rum and gin which are also both priced cheaper than regular top shelf labels which consumers really appreciate.

Changing economic environment 

The only way we can operate in this manner is by being a freehold pub and operating at a tight margin by selling quality beer at a high quantity. We are able to shop around for the best pricing on products and in doing this we can keep prices generally lower than Weatherspoon which in turn brings in more customers.

So whilst the industry is suffering, it doesn't seem to me that breweries have adapted to the changing economic environment, when the pub is returning a profit, the breweries will up their leasing costs and drive up the prices forcing landlords to make less and changing customers habits, giving people more incentive to go out less in the changing climate, unless they do I believe we will see more closures. However I also feel we will see the growing success of more independent businesses such as ours.

Whilst this article is about the hospitality industry you could also draw comparisons to other industries such as farming where the barriers to entry are very similar and driven by ownership, location and offering. This then begs the question how do we ensure the future of both these industries when youngsters are unable to get a foothold.

I'm fortunate that I was able to acquire innovative funding. It is therefore imperative we start to see more innovative ways to financing rather than the standard loan or leasehold model.