IN BRITAIN, an estimated 18 pubs are closing every week and hundreds of Irish landlords are battling for survival in an industry struggling to deal with supermarket prices, changing lifestyle habits and brewery beer-ties.
Two industry insiders tell The Irish Post how they see it.
The Area Manager: Hugh O’Rourke
I am employed by a pub company as a senior area manager and care deeply about pubs and the people that run them.
I am second-generation Irish and my family ran a tied/tenanted pub for 17 years. I am also a member of the Campaign for Real Ale (CAMRA) and a Fellow of the British Institute of Innkeeping (BII).
The current consultation into the relationship between landlord and tenant in the leased and tenanted pub sector is the latest in a long line of similar investigations. A small but vociferous minority of MPs and pub tenants are critical of the big pub owners/landlords who fall under the term ‘Pubco.’
As the son of a tenant publican the current arguments are all too familiar – beer prices are too high, rents are too high and the landlords do not invest enough in their properties. I think back to the ‘70s and ‘80s when landlords were the big brewing companies like Whitbread, Courage and Bass.
My father left his pub after 17 years blaming Whitbread and the Government for the fact our pub was no longer economically viable. He was a great landlord and his points were entirely valid but in later years, he didn’t attract enough new business as he needed to.
After government intervention in the industry, brewing companies such as Whitbread exited the tenanted pub sector, giving rise to non-brewing landlords. It is now interesting that government intervention is being called for again.
It is true that the wholesale cost of beer is higher for tied tenants but this cost is reflected in the rent for a tied pub and in the case of Punch Taverns every single rent review is conducted by a Chartered Surveyor and have to adhere to strict guidelines. They are not always independent but any landlord can have their own surveyor.
If a tenant is unhappy with his or her rent review and wishes to pursue external arbitration, the cost of this is only £200 and the likes of Punch Taverns agree to be bound by any decision found against it, as do the other large Pubcos.
It is encouraging that all landlords take out membership with the BII to support their interests.
It is a pity that politicians increased what was already an exorbitant rate of beer duty by a further 42 per cent in the period 2008 — 2013, compounding the problems of the recession and the effects of the smoking ban.
Credit must go to the current government for ending the hated beer duty escalator introduced by the previous government.
Drinkers in Britain consume 13 per cent of all beer sold in Europe but pay 40 per cent of the EU beer tax bill. Historically this rate has always been high.
Quite apart from escalating beer duty and the increased costs of production, distribution, etc, another factor is the cost of actually running a pub.
When my family owned a tenanted pub we did not have to deal with the current complexities and costs associated with employment law, health and safety, licensing, fire safety, energy performance etc.
The previous government introduced a new licensing regime and quite apart from other costs associated with this particular piece of legislation, the cost of a licence alone rose from £10 per year, per pub, to the current £180 per year.
Yet this is an industry which contributes £20billion to the British economy and £8billion in tax revenue; more importantly over 600,000 people rely on beer and pubs for their employment.
Pubs are closing every week but the bottom line is that we still have too many uneconomical pubs and the pub trade is not exempt from the economic law of supply and demand.
Importantly ‘free of tie’ pubs are closing at a faster rate than tied pubs. Having a supportive landlord in difficult times should not be under-estimated.
Punch Taverns has invested £120million in its pubs over the past three years and will continue to invest huge sums if our beloved politicians recognise that the record of government interference in our business is a poor one which always results in unintended consequences.
One of the advantages of the beer tie is that this investment produces a return for both landlord and tenant; compare this to free-of-tie pubs where landlord investment is significantly lower.
Most people who express an opinion on the pub trade have a particular self-interest and/or bias.
As a pub-goer, a publican’s son, a pub company employee, a member of both the British Institute of Innkeeping and the Campaign for Real Ale, I have several.
However if this trade is to thrive, all participants need to stop blaming each other and work together to ensure that consumers have compelling reasons to visit their local pubs.
Publicans who produce compelling retail offers prosper, even in these difficult times; those who do not, often fail. Business is like sport, it’s played out in a competitive arena.
Like the Premier League, the best operators are Champions League contenders, the worst are destined for failure and the majority make up the sea of mediocrity in the large middle ground.
On a final note, a publican in the city where I live recently wrote to the Business Secretary, Vince Cable.
The last line of his letter stated: “Without Punch Taverns’ continued support I would not be trading today”. There are many Irish people, including myself, my colleague, surveyor, and more importantly the aforementioned publican, who rely upon the ‘tied’ tenanted pub model for our future success.
We may not shout the loudest, but our opinion is valid nonetheless.
The Landlord: Ambrose Gordon
I have been involved in the pub trade in Britain and Ireland since 1981 and it is a tougher industry now than any time in the last 32 years.
I run a freehold pub in London so I’m not affected by the beer-tie debate that has been raging in the industry.
But as a long-time publican I know the game is getting harder because of economic pressures and because people’s lifestyle habits are changing.
One of the most popular restaurants in my locality has been making its name on vegetarian cuisine. Can you imagine this style of restaurant being popular, 20 or even 10 years ago?
In the hospitality game it is just one example of how tastes have changed.
In the early ‘90s I ran the Spotted Dog in Willesden, north west London. It was a huge pub with a big turnover. There was music seven nights a week and a constant flow of people through the place. We didn’t rely on the weekend, like many pubs have to do now, but a lot of Irish people socialised differently then.
I had so many regulars that came into the Spotted Dog in the evening for something to eat, to have a few drinks and catch-up with friends.
I’m sure a lot of readers will remember hotspots like Fulham Broadway, The Kings Head and the Hibernian and the big crowds they’d draw. Then on the Monday, everyone would go to the Gresham on Holloway Road.
These days a huge proportion of Irish people wait for the weekend to socialise. But younger people go out late and stay out later.
If you don’t have a late license then you’re not getting these customers. Hiring a band from 9pm to 11pm on a Saturday night just doesn’t pay now.
There has been a deeper lifestyle change with Irish punters also. The Irish pub is not the lifeline to home it once was.
People don’t crave the comfort of that familiar social environment when they can fly back to Ireland as easy as they can now. If a cow calfs they’d go home; if mum buys a new coat then daughter will want to fly back and see it.
It is an exaggeration, but the ease of movement lessens the importance of the Irish pub as a social anchor.
It’s not just pubs in London that are getting a hard time. I was back visiting Portumna recently and nine places where I used to go were now closed.
Be it Ireland or Britain, running a pub in today’s environment is hard work. There are so many hidden costs involved and I don’t know how pubs that are tied to breweries can make a living because the prices they have to pay for beer are so much more.
I reckon they’d be lucky to make a margin of 20 per cent.
There is a certain amount of security, however as a freehold I can shop around for the best deals.
I could name nearly 100 Irish pubs that have closed in London in the last 30 years. Old places I used to bring copies of the Sunday Game to, knocked down and replaced by blocks of flats.
But in spite of all that, there is a still a living to be made for good publicans. Gone is the day when you could just put an ‘Open for Business’ sign on the door. You need to work hard for your customers, look after them, try and give them something extra as well as a decent pint.
You have to try and create a community feel around the pub.
For me the live GAA games are still a big weekend draw and whoever is playing, we’ll get the flags and the county colours up outside. There will be finger food at half-time and a band will come on when the game finishes.
But it is a long time ago, back in the days of the Spotted Dog, when we’d buy in vats of beer we were so busy, never mind kegs!
Ambrose Gordon is the landlord of the Man of Aran in Rayners Lane.