39 pubs a week now closing!

[MikeB]

News today that the number of pubs closing every week has increased to 39 over the last six months is heartbreaking for all of us who love pubs. I often hear it said that pubs which aren't viable deserve to close, but it's rarely as simple as this. Since the smoking ban, pubs have suffered from under-investment and too many can't raise the finance to improve their amenities while faced with rising beer prices, falling consumption, increased utility and compliance costs and often challeneging rent bills.

Despite this the Government is threatening to introduce a mandatory code of practice which would cost jobs and add massive costs to the pub trade. Do we need this? As unemployment rises and recession deepens shouldn't our Government be promoting the community role of the British local?

[Keith]

Thank you camra for providing this forum. A great idea.

I refused to renew my membership of Camra in protest at the organisations refusal to attack the real cause of so many pub closures - the large pubcos- in particular Punch and Enterprise. No-one has a problem with the tie for regional brewers or indeed other chains with less than 500 outlets; but parasite pubcos that add no value and suck loads of profit out of the industry deserve to die.

These pubcos are the cancer that is killing the British pub. They are the middlemen who brew nothing yet take everything. They squeeze the brewers and they squeeze their pub landlords. They even squeeze microbreweries.

In their greed, they have borrowed massively to expand (£4.5bn) and now every pint sold in every Punch pub, the customer pays The Punch Penalty ... an extra 50p per pint. Now that's worth campaigning about!

Camra has done a good job promoting the microbrewing sector of the industry - you only have to view the vast number of bottled ales in any decent branch of Morrisons, Tesco or Asda to see how well this sector is doing.

But in the on-trade, Camra is ducking its responsibilities on pubcos. Forget Axe the Tax, its time to kill the pubcos.

[gazchez]

As much as the Government seems to not care about the British pub, a few pennies on or off duty is unlikely to make a huge difference to the viability of these establishments. Mike refers to under-investment, beer prices, challenging rent bills - where is the cause here? It is the PubCos. And the pubs that are closing are in the main PubCo owned pubs. The reasons are evident here - there is a model that in today's economic climate doesn't work, in part because the property market is now stagnant at best. There was no real need for significant investment in their pub stock in the recent past, as an increased value of their assets could always be realised by selling an underperforming pub.

Now we have PubCos unable to realise cash when they need it, making investment and support of the pubs less likely at a time when it is most needed. Add to that ever-upward rent reviews, a stubborn (and stupid) reluctance to allow their licensees any real choice in the ales they stock whilst charging prices almost twice what we have to pay for beer at a festival, and we have an almost unchallenged downward spiral.

If Whitbread and Watneys of yesteryear were seen as the "enemies" of real ale and CAMRA, today you can substitute Punch and Enterprise for those names.

[quigzy]

I agree wholeheratedly. There is another reason though. I used to drink a lot up in the Old Kent Rd (where my family are from). Apparently when my old man was my age there were 13 pubs on that road, now there is only one. And even that is a pub/club (world turned upside down). The road is now full of Caribean food stores and money exchanges

[Richard English]

Whereas it is true that Pubcos (well, some of them, anyway) are the cause of much of the local pubs' misfortunes, it is wrong to suggest that CAMRA is doing nothing about the problem. Check their website.

And don't forget that CAMRA is only as good as its members - what are you, as individuals doing to help your locals? CAMRA has plenty of suggestions as to the ways you can help - check the website.

[Keith]

Richard - I took your advice and checked the website. You are wrong - I cannot find a single incidence of Camra campaigning or attacking Punch or Enterprise.

I run a Punch pub and we sell 400 brewers barrels of cask ale a year. From over 2500 cask beers in the country, Punch only offer us a list of 40. We pay more than twice as much for a firkin as Wetherspoons and 40% more than the freetrade. As a result our customers pay 50p per pint more. Now that's what closes pubs - poor choice and high prices.

Local branches need leadership on this issue - leadership Camra is not providing.

Its a soft option to provide a website to save pubs but it lets down Camra's proud tradition of campaigning. For years Camra has let the real culprits escape - the pubcos have wrecked the pub industry and Camra has done little about it. Camra has failed British pub drinkers and its time to make up for this.

[Richard English]

The campaign is touched on here http://www.camra.org.uk/page.aspx?o=pubs plus, if you contact Jonathon Mail at jonathan.mail@camra.org.uk he will be able to tell you of the way in which CAMRA is campaigning against the Pubcos excesses.

I am very sympathetic about your situation; my local is an Enterprise-owned pub and the Landlord there has just the same problems. But there are ways around the problem, although I have not yet researched them thoroughly. You will appreciate that I am a beer connoisseur, not one whose livelihood depends of beer sales - but I do know that some publicans in this area seem to be getting around the "tie".

One thing that does occur to me: would the restriction placed on the tenants of Pubcos possibly be illegal under the terms of the Unfair Contracts Act or even under Anti-Trust legislation? I am not a lawyer - but I am sure there are those around who have that skill.

As I told my own Landlord; CAMRA is on the side of pubs just as it is on the side of drinkers - but it can't do the job on its own. Only with the support of members can CAMRA be fully effective - and too many members are simply apathetic.

I have, in the past two months, written to my local paper to highlight the lies of the anti-alcohol lobby; written to my MP to ask for his support; sent a press release to my local paper to highlight the changes my local is making.

If every CAMRA member did the same then CAMRA would be far more effective. CAMRA will help; members need to ask for the help.

[Watneysred]

Interesting article in the paper today. Tim Martin proclaiming the pub co model of Punch and Enterprise is dead. Looking at debt levels and recent trading statements it’s easy to agree with him. With cash being rung out of these businesses to service a debt laden capital structure there is nothing left for shareholders or to invest in the pub estate. They are up the creek without a paddle.

If they expect the recession to produce a pool of people, all with romantic rather than realistic ideas of running a pub, all with redundancy money burning a hole in their pocket, why adopt a business model of helping the licensees run successful businesses? Why not count on being able to turnover licensees every 6 months and ring them and their unfortunate customers dry? Stumble along seems the best and only policy.

Attempting to prop up the market with price controls by hobbling either Tesco or Spoons will not see punters flock to run town tatty boozers charging £3 a pint and offering the choice of Carling or Smiths Smooth.

Apologies if that is not your experience of Enterprise/Punch, or if you run a nice pub co pub, but down my neck of the woods these operators offer shabby boozers that charge top dollar and don’t enjoy the monopoly of being the only pub in a small village. Local independent brewery pubs offer good beer and proper food whilst Enterprise/Punch pubs offer keg bitter and pinged microwave food. The grub in the spoons may be micro waved but its half the price.

I read in the news about how the pub sector is dying, but my own, admittedly anecdotal experience is that the pubs in trouble are ones I wouldn’t touch with your barge pole. I cannot help but wonder whether the interests of me, a cask ale drinker, would not be better served if these pub co’s went to the wall. The value and therefore the price of these pubs in current market conditions would give potential freeholders a fair crack at opening a decent pub. One that I would want to go in.

[Mr_P]

Richard - I took your advice and checked the website. You are wrong - I cannot find a single incidence of Camra campaigning or attacking Punch or Enterprise.

I don't know what part of the UK you live in, but I was one of a number of CAMRA members, mostly from Worcester branch, who picketed an auction of pubs held on Bath Racecourse last month, in which Enterprise were selling pubs with restrictive covenants. We gave out leaflets to almost every one who attended, the only exceptions being a couple of drivers who refused to stop.

Hopefully the story will be in the next issue of "What's Brewing".

Meanwhile to see some succesful examples of rural pubs that have been saved, go to http://www.herefordcamra.freeuk.com/pub_news.htm

[BeerMonkey]

Keith - you may have a point that some pubcos charge more for their beers forcing you to up the cost at the pump, especially compared with Wetherspoons, but isn't this just healthy business and competition?

Price is not the only reason to visit a pub. I appreciate it's a factor, especially in these hard times, but it's too easy to use the price argument as the sole reason why pubs are closing. If a pub feels pressure from, for example, Wetherspoons, then surely this pub should be looking to give their customers something different in order to compete - be it a better range of beers, better quality beers, different/better quality food, a nicer atmosphere, live entertainment, etc etc.

I sympathise with your point that you have a limited choice of beers and are probably quite limited to how you can expand the pub and make it your own but there must be something that can be done?

However I completely disagree with you that CAMRA should be fighting against the pubcos, if anything, they should be working more closely with them to work on new ways to promote real ale and real pubs.

To quote, "CAMRA campaigns for real ale, real pubs and consumer rights". Almost every pubco outlet will stock real ale and serve it at a fair quality and price, and the pubcos pubs make up a huge proportion of real ale pubs in the UK. If CAMRA were to fight against the pubcos then real ale sales would inevitably go down the swannie!

[Keith]

Thanks for reply BeerMonkey. Its a good debate.

We agree with you that price is not the only way to encourage folks into pubs. We run the Prince of Wales in Moseley, Birmingham and we use tradition, friendly welcome, 9 hand pulls and a host of other stuff not based on price to sell 400 barrels of cask ale a year.

The problem with pubcos is not just the high prices they charge us for beer but our choice is severely restricted. Only 40 ales available from our local depot. Just think of the environment benefits, the local economy benefits and the drinking benefits if we could buy from one of the 50 or more local breweries within 50 miles of Birmingham. Iconic Black Country ales, newer micros in Worcestershire and Warwickshire, Hobsons, Purity, Church End, Burton Bridge - the list is endless but we can't have them and our customers can't drink them in our pub.

If the tie was removed for all estates above 500 pubs, sales of cask ale would grow massively. Local breweries in the Midlands would have a massive market to go for and they would not be forced to pay a middleman. SIBA's Direct Delivery Scheme could be used if brewers wanted to.

Availability would be up, margins would be up (for brewer and pub operator) and prices could come down.

This is a much better scenario than we have now.

[BeerMonkey]

Hi Keith,

I've just done some reading on the CAMRA website to find out more about a scheme they launched recently scheme called LocAle -

"CAMRA LocAle - the new accreditation scheme to promote pubs that sell locally-brewed real ale, reducing the number of 'beer miles' and supporting your local breweries"

http://www.camra.org.uk/page.aspx?o=locale

My CAMRA branch must have recently signed up to the scheme because I've seen pubs near me displaying LocAle publicity material for a few weeks now - leaflets, posters and the little signs on the hand pumps. It's all very striking and certainly drew my attention away from my regular beer the first time I saw it. Also made me want to join CAMRA - I'll have to get round to that soon!

Could this scheme potentially help in your situation?

If I were you I would speak to someone from your CAMRA branch to see if they've already signed up, and if they not then ask them why not! Then, would it not be possible to set up a meeting with your area manager about getting at least one locally sourced beer in your pub? Got to be worth a try? Use all the arguments you outlined in your post (supporting local breweries, giving customers something new/interesting/local, benefits the environment, etc etc) and you never know what may happen.

[Richard English]

I downloaded all the information on Locale and took it to my local. The Landlord there (who has only recently taken over and is still building the business up) was most interested but his hands were tied. You see, his is an Enterprise pub and he is restricted to their authorised list. So instead of getting beer from one of Horsham's three brewers he has to order one of the major national brands from Enterprise. If he is caught buying privately (and his barrelage is matched, sales against purchases) then he is fined.

As I wrote earlier, I wonder whether this sort of restriction could be considered an unfair condition of contract - but I am not a lawyer and wouldn't want to express an opinion.

[Keith]

More good debate so thanks for your comments.

With Punch there is no chance on LocAle. We are not even allowed to use SIBA's (society that represents most micros and small regional brewers) own excellent delivery scheme. Richard your Enterprise host can use this which may be of help.

However its interesting to note that SIBA delivery dray can have say 2 firkins of the same beer on the van - one for an enterprise pub and one for the freetrade. Now the enterprise firkin will probable cost £20+ more than the free trade firkin - same brewer, same beer, same supply chain costs. But Enterprise pocket an extra 30% and us drinkers have to pay for it.

[mildchild]

More good debate so thanks for your comments.

With Punch there is no chance on LocAle. We are not even allowed to use SIBA's (society that represents most micros and small regional brewers) own excellent delivery scheme. Richard your Enterprise host can use this which may be of help.

However its interesting to note that SIBA delivery dray can have say 2 firkins of the same beer on the van - one for an enterprise pub and one for the freetrade. Now the enterprise firkin will probable cost £20+ more than the free trade firkin - same brewer, same beer, same supply chain costs. But Enterprise pocket an extra 30% and us drinkers have to pay for it.

We've had similar problems with Punch, but fortunately there was significant demand for Castle Rock Harvest Pale so they added it to their approved list. £20+ extra a barrel than from the brewery itself, but it now means that there's the potential for many more pubs to join Locale in our area. One of those I was hassling to join said that they were only able to get HP on at weekends but it massively outsold the other beers. Now it's on at all times it can be with one report of them selling through a barrel in three hours then the next in another three!

As the branch that founded Locale some 2 years + ago, we've been avid supporters of this truly going nation wide and all pubs at least having some local beer presence. It appears to be working around our area as we're just breaking the 100 pubs mark and have had little problem with pubs sticking to the rules.

In our recent pub census the top brewer by number of pubs changed from Greene King to Nottingham Brewery in one year. But we have to be careful when awarding the accreditation too that not only is the beer quality good on one visit, but every visit and that someone is checking this regularly. If a beer camra are seen to be promoting doesn't make the grade, it looks bad for us.

[Mick at Brackley]

I have some news of a pub which is reopening its doors on Good Friday, its a Wells/Young pub which has been closed for the past 4 years.
This was due to criminal acts which took place with Arson being done to the pub.
Its an interesting story, as to its reopening, as the incomong tenant a youngster of 29, is still keeping is present pub on as well.
Neither have beeen in the GBG, but his first pub, is called the Carpenters Arms at Lower Boddington, a Hook Norton pub, where the tenant went in with ideas.
He has now taken on the Wells/Young pub whichb is based at Farthinghoe, called the Fox Inn.
It is just of the main A422 brackley to banbury road, his other pub is about 2 miles of the A361 Banbury to Daventry road.
Although locally there are pub changes, due to situations as to tenants who cannot maintain the lease, or rent.
Are we the customers, at the core of the closures, do we blame the supermarkets, or is the greed of the pub co, brewery owner, as to what they charge the tenant .
When you have Punch who monitor all beer sales by computer, and not giving the landlord freedom to take local brews, which are saving costs.

[Richard English]

When you have Punch who monitor all beer sales by computer, and not giving the landlord freedom to take local brews, which are saving costs.

Enterprise do the same. There is a barrelage counter that records the quantity of beer sold and, of course, they know how much beer they have supplied. If there is more beer sold than supplied then they know that the Landlord has committed the heinous crime of buying beer at the market price - and not the Enterprise Inns rip-off price. And the Landlord is fined by Enterprise for each and every instance they discover - presumably with no possibility of appeal.

Sadly nobody seems to think that anything can be done about these kinds of evil practices, so I expect that Enterprise, Punch et al will just carry on screwing their Landlords into the ground until all of them have simply shut up shop. Then they can get on with their real business of making millions out of property, no longer inconvenienced by the boring business of brewing beer.

Unless, of course, someone with the requisite legal knowledge can successfully challenge them under the Unfair Terms in Consumer Contracts Regulations 1999. These state, amongst other things, "An unfair term is one that creates a significant imbalance in the parties’ rights under the contract, to the detriment of the consumer, contrary to the requirement of good faith."

The Act is about consumers, not traders, so cannot apply directly to the contract between the Landlord and the PubCo, but it could maybe be argued that, by restricting a Landlord's right to buy beer on the open market, this restricts consumer choice in two ways: firstly by restricting the range of different beers that the Landlord can supply and secondly by restricting the range of affordable beers by virtue of the higher prices a Landlord has to pay.

Do we have no lawyers on this board who know about this area?

[BarbaryBill]

It's been fascinating reading this forum. Complaints that CAMRA is not supporting pub owners. That pubcos' are all shafting their licensees and hoyking up prices and failing to invest in the fabric of their estates. All may be true - but contributing to the demise of 39 pubs every week? but they can't be the only reasons surely?

Purely anecdotally, I've noticed that good pubs, in a good condition, offering great beer, great food and wonderful service always seem to have punters in them, spending copious quantities of cash despite the recession! Traditional pubs focusing on wet sales chilly concarne and scampi and chips are notable only by lack of punters. The Alford Arms in Frithsden Hertfordshire is always busy - nice ales and professional staff, a nice atmosphere and food at £14 a plate. My traditional local (Punch owned/under-invested-in hovel) with odorous toilets, sullen staff and 2 meals for £5.95 is empty and struggling.
Successful pubs are now destination pubs. Consumer culture has changed. The traditional local is of less importance to most consumers. Consumers are family and friends orientated rather than acquaintances orientated. The male dominated basis of local pubs is disappearing.

Pubs can still be good businesses and attractive destinations - if those running them know which punters they want to attract - and if their are enough of them!

[Mr_P]

Not all "wet" pubs are struggling. The Barrels in Hereford is still as lively as ever! And Hereford is a city with low incomes and a predominantly elderly population, but the Barrels is populare with all ages - 18 to 88 (and above!)

[Richard English]

As I said, some pubs don't deserve to succeed - and similarly there are others that have every right to their success.

I was in The Victoria, in Strathern Place, near Paddington, last Tuesday night. Yes, in the snow, ice and freezing temperatures. And it was heaving. The main bar and the theatre bar were shoulder to shoulder and the library would have been had it not been for a private meeting of The Simpletons public speaking club - which I was attending.

When we left, at around 2145, then those customers who'd been unable to get a seat elsewhere moved in and I walked away from the happy sound of a bustling pub.

OK, that's a busy area in a busy city - but there are other pubs in the area that had relatively little trade.

Difficult to suggest a single reason for The Victoria's success - but I suggest that is is the overall balance of friendly, efficient, and above all helpful service, good beer (Fuller's) at fair prices, and good pub food.

For those who wish to try the pub for themselves, the Simpletons Club, in association with Kingston Debating Society is running its annual beer-related debate in the Victoria's Theatre Bar - see my separate posting.

[Richard English]

I learnt today that Entreprise are increasing the wholesale prices to their tenants by 6%, citing as justification that their own suppliers prices have increased. Probably a lie but in any case their own margins would be more than enough to absorb the increase. This means that the price of a pint of good beer will be over £3 at the pumps, and of chemical fizz maybe £3.50.

Of course, had they not included the evil restriction on their tenants' contracts that allows them only to buy from Enterprise, their tenants could buy their supplies on the open market for far less. JDW, of course, will still be selling their ales for £2.00 or less, free as they are to purchase from the most competitive suppliers.

As I have already suggested, I am sure that there must be a way in which the Law could be invoked to have this disgraceful restrictive clause set aside. Sadly I am not a lawyer, although I am sure we have lawyers on this board.

[gazchez]

Perhaps things are not as simple as they seem. With the high gearing of Enterprise and Punch, they have massive debt effectively secured on the property prices of their pubs. As we know, property prices have plummeted by as much as 30% meaning that the equity they have in many of their pubs is effectively negative. They need millions a month just to service their debt, but with pub closures at an unprecedented level, need to squeeze more and more from the remaining people. Unfortunately many of the good landlords left the trade many months or years ago due to the greed of the pubcos (if you don't deliver the returns, we can always sell the property for a vast profit anyway being the short term thinking), and are now left with a increasing number of pubs who are empty or trading below sustainability (with few landlords now able to make this work), yet still attracting business rates even when closed. Panic now sets in, make HO staff redundant and increase prices - neither of which will actually help anybody in real life. More pubs close. Less revenue. BOOM

Punch and Enterprise ceasing to exist is a real possibility. Don't expect them to do anything good soon. Problem is that if thousands of pubs come on the market, who will buy them? And for the many landlords who perhaps would love the opportunity of a freehouse, who is going to lend them the money in todays economic climate?

Lose/Lose situation?

[Richard English]

Oh yes. I realise the problem and the cause of it. Just like the banks and finance houses, they traded recklessly when times were good and have no reserves now that times are not so good. But, as any business that has survived previous recessions could tell them, the law of diminishing returns will soon set in if you keep trying to maintain your margins by price increases in a declining market.

In the great depression of the 1930s, many of Britain's motor and motorcycle manufacturers went broke. Ford and Morris cut their prices, grew their businesses and survived.

There is a clear parallel right now in the licensed trade - sadly the likes of Enterprise and Punch don't see it.

It's interesting to speculate what would happen if Enterprise and Punch do go broke - what will happen to their surviving pubs? Will they put them up for sale (without a restrictive covenant) or will they simply close them? I have a feeling we will soon find out and I predict one thing - there will be no Government money to bail them out.

[Mr_P]

Punch and Enterprise ceasing to exist is a real possibility. Don't expect them to do anything good soon. Problem is that if thousands of pubs come on the market, who will buy them? And for the many landlords who perhaps would love the opportunity of a freehouse, who is going to lend them the money in todays economic climate?

Lose/Lose situation?

Well so far Enterprise have had no shortage of offers from people willing to buy pubs from them, but they have refused to sell pubs to people who rish to run them as pubs. Instead they've insisted on these trestrictive covenants. So I for one will not shed any tears if UNenterpirse go out of business; if I could I'd dance on their grave!

[Richard English]

Here here! Does the phrase "Dog in the manger" mean anything to anyone here?