Saturday, 11 June 2011

Bad company

Something that is very noticeable on the local pub scene is that pubs owned by pub companies seem much more vulnerable to closure than those owned by independent breweries. Yes, the brewers have closed some pubs, but in general only when they have clearly become unviable or when they have been made an offer they can’t refuse. But the vast majority of pubs that have closed belong to the pub companies – amongst recent high-profile closures look at the George in Stockport town centre, the Ash in Heaton Norris and the Greyhound in Adswood.

Pub companies are well-known for their hard-nosed business practices and their objective is to get the best return out of their properties, or, if they can’t make sufficient profit, to see if they can sell them off for redevelopment. Breweries, on the other hand, while clearly they can’t sustain unprofitable pubs in the long term, have an interest in maximising the sales of their own beers, and so it makes sense for them to take a broader view.

A further factor is that pub company outlets often seem to be run in an inconsistent manner with frequent changes of format and emphasis, not least in often putting cask beer in and taking it out again, which can’t do their standing with customers any favours. With a Holts or Robinson’s pub, you know what you’re getting, and it doesn’t tend to change dramatically. Pub companies alsoseem to be much keener to board pubs up rather than installing temporary licensees, something that will just drive customers away that they may not be able to attract back.

An exception to this is Hydes, who don’t seem to have the local following that buoys up Holts, Lees and Robinson’s, and who have made a number of bad calls in recent years with pub acquisitions and refurbishments (see the previous post about Corbans). To be honest, given recent closures and sell-offs, I get the impression that Hydes have somewhat lost the plot, and it would not surprise me to see them sell up in the next couple of years.

6 comments:

  1. I sometimes wonder if the pubcos are managed by anyone with actual business experience. Or are they all just private equity spivs out of their depth, and devoid of any interest in the pub business?

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  2. I sometimes wonder if the lefties have anyone with actual business experience among them. They have always seemed so intent on centralized control and prohibition of things individual, unique and devoid of free enterprise. I imagine extreme-leftist Labour's smoking-ban had as much to do with decimating the pubs as anything else, since the bankruptcies began to plunge immediately after the ban took effect - cause and effect, pubs closed, no lives saved.

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  3. @Nev: I think they are, but sadly, that business is bricks and mortar and not hospitality. Leave a pub boarded up and claim it's unviable, and you might swing a change of use and get more money if the place is suitable for residential use. Some London councils are worried that they can't stop closed pubs being sold for conversion to bookies.

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  4. Perhaps pub companies are better at realising the pub industry is now a busted flush, and moving to cut their losses.

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  5. @Harkonnen. That's just silly. The pub is not a busted flush; it just has to adapt. Unfortunately, licensees who do so, and improve trade thereby, find the benefits from this appropriated by the pubcos in higher rents etc. So why bother? The average return to licensees of pubcos is about £15 grand a year; the pubcos take several times that for doing not very much. What organism can flourish when its lifeblood is sucked away by parasites?

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  6. Anon: as I've pointed out to you before (it was you,wasn't it? I'm unsure as you're too timid to give a name), the majority of Tory MPs voted for the smoking ban - lefties all presumably. Andrew Lansley said the ban was "an important step" in establishing "a culture that encourages better health". Nanny statism is an affliction across the political spectrum.

    But I'm missing a point, aren't I? Which is: don't let the facts get in the way of a bit of silly leftie-bashing.

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