Who or What Is Killing the British Pub?

Property developers, greedy, complacent "pubcos" or video-games?

by René Lavanchy
29 January 2015, 12:25pm

(Photo by Tom Johnson)

Every closed pub is the gravestone of a dead community. For each boarded up local with a washed out Sky Sports banner flapping in the wind, there are a group of punters who used to drink together, now broken up and watching TV alone at home. The British Beer and Pub Association says net numbers went down by 20,000 between 1982 and 2013. But nobody agrees why.

Depending on which "save the pub" campaign you follow on Facebook, the cause of pub closures is either beer duty making pints too expensive, the smoking ban, rising property prices or the fault of the big pub-owning companies – the now notorious "pubcos" who somehow want to drive pub landlords out of business despite relying on them for income. Or do we just not like going to pubs any more? Increasingly, the local is an empty looking building that you peer out of a bus window at, perhaps with a tin of beer in hand on the way to a house party elsewhere. Let's weigh up all those factors and work out once and for all: Who or what is killing our pubs?

(Photo by Tom Johnson)

The Tobacco Smokescreen
"A fag and a pint is a man's right," the Sun half-rhymed in 2004 when health secretary John Reid, a former 60-a-day man, proposed banning smoking in pubs that served food. But when the ban eventually came in – two years later in Scotland and three years later in England – it affected all pubs. In both countries, pubs that had previously been closing at the rate of a few hundred a year were now shutting at more like a thousand. Tellingly, in both countries, pub numbers took around the same time to fall off the cliff: about 15 months. So, there can't be any argument: banning smoking in pubs has driven people away. Right?

The Campaign for Real Ale, which lobbies for keeping proper pubs open, is ambivalent about it. "I think it's probably too soon to know the effect it's had," Tom Stainer, CAMRA's head of communications, says. "It depends massively on who you're talking to... there's anecdotal evidence all over the place."

Anecdotal evidence isn't hard to find. "The smoking ban has had zero impact on my pub," Dave Mountford, a pub landlord in Derbyshire, says without hesitation. "I've run two pubs, and they've both achieved greater sales during the smoking ban than they did before it came into effect."

One reason might be that Dave Mountford's pubs get half their revenue from food – typically, these "gastro-pubs" are the ones that have benefited from the ban. "The backstreet boozers – the 'wet-led' [drinks only] boozers – are the ones that will have been hit," Dave concedes. So if people are no longer having their after-work pints in their local backstreet boozers, where have they gone?

A 'spoons (Photo by Jake Lewis)

Did the High Street Kill the Backstreet?
If, like me, you spent your formative years painting your parents' front porch with vomit after a night's drinking at a chain that's replicated from Kingston to Durham, you might think you know the answer.

In the 1990s and early 2000s, as alcopops took hold and the pub industry looked for a way to appeal to the cast of Coupling rather than the Men Behaving Badly crowd – the high street pub exploded onto the scene. Brands like All Bar One and O'Neill's emerged to cater for legal teenagers and people in their twenties. They opened airy, well-lit pubs with room for hundreds of drinkers to draw in young people turned off by the cramped old boozer down the road.

And then – going after a slightly different crowd but still identikit – there's the big daddy of them all, JD Wetherspoon, which has more than 900 pubs across the UK and is growing faster all the time. It took 15 years for Wetherspoon to open its first hundred pubs; the latest hundred, by contrast, have been opened in the last four years. Surely this unstoppable rise must have come at the expense of the traditional pub?

Not quite. Comparing old and new maps proves that most of these new pubs opened in places unserved by pubs before – and besides, despite the impression we have of there being three Wetherspoon's in every town centre, they still only account for less than 2.5 percent of all British pubs. Tom Stainer of CAMRA calls the new breed of pubs a "small drop in the ocean". The idea that drinking has shifted over to cloned, managed outlets is tempting, but not backed up by the facts. We need to look further.

(Photo by Nick Meares)

Enter the Pubco
"What is the bloody point?" Paul Salvatori, landlord of The Aviator in St Ives, Cambridgeshire cried out. Paul had put on a live music night to boost his earnings, which had worked, pulling in an extra £700. But his profit came to a grand total of £3.95. The pub owner, "pubco" giant Enterprise Inns, pocketed £312 for the beer. "When you put on a promotion... all you're doing is creating extra revenue for them," he told me.

Paul's story has been repeated to me up and down the country over the five years I've been writing about the pub industry. Landlord after landlord has come forward to tell me that their pubco owner is charging them extortionate amounts for beer, refusing to invest in the pub and playing hardball, or dirty, in negotiations.

Take The Three Tuns in Tamworth, also owned by Enterprise Inns – the back wall of the pub fell into a canal; Enterprise allegedly refused a rent reduction but "offered us some posters and banners".

Or The Hyneholt in Chigwell – whose pubco sent a bailiff without warning who tried to get the police to help him raid the pub.

Or the Groeslon Hotel on Anglesey – the roof leaked and the fire alarm didn't work, but Punch Taverns leased it anyway, and then demanded an above-market price when the desperate publican tried to buy it.

Or The Foresters Arms in East Sussex... well, you get the idea.

Both the pubcos and the pub-owning brewers, who together own about 60 percent of Britain's 48,000 pubs, prefer to lease them out to landlords through the "beer tie", under which the pub landlord has to buy his beer through the pubco at massively inflated prices. One brewer I know sells their beer to Enterprise for £68 a cask, who whack on two-thirds margin and sell it for £110. The same beer costs about £80 from a wholesaler.

In theory, this means publicans get lower rent and help running their pub in return. In practice, there's widespread evidence that pubcos have often, if not consistently, ignored their side of the bargain. In a 2010 survey by the GMB trade union, over half of tied pub landlords said they lost money from their pubs and had to subsidise them through a secondary income. The beer tie has made these pubs unviable.

I did ask Punch Tavern and Enterprise Inns to comment on this, but they didn't respond.

(Photo by Nicholas Pomeroy)

Our Pubs Are Turning into Flats
Things have got worse since the 2008 financial crisis. When money was cheap, big pub owners borrowed billions of pounds to expand their empires. When the crisis struck, however, their businesses were on a downturn and new money to replace their existing debt was much harder to come by.

Instead of buying pubs, pubcos are now dumping them as fast as they can – Punch is currently aiming to sell 1,000 to pay off its debts. Since pubs go for more money if they're billed as ripe for redevelopment into flats or shops, that's exactly what many of them have become.

Click to enlarge (Photo by Tom Johnson)

The Admiral Mann was once a traditional, simple and friendly North London Victorian pub with darts teams, good reviews and its own cat. It's now (following a memorable last night) closed and boarded up, having been sold to a property developer. "We thought it would be spared," Richard Lewis, who led a campaign to save the pub, told me, "because it was a profitable place... it goes to show that pubs can close at any time." Not profitable enough for the owners, McMullans brewery, to reject the rumoured £1 million sale price. "You could've had people queueing up round the block buying pints of beer all day, every day, and it would never be worth as much as if it were sold for flats." The pub cat became homeless and had to be put down.

(Photo by Tom Johnson)

Spare Some Change?
If the critics are right and pubcos are driving pubs into the ground, why the suicidal business model? Aren't changing social and market conditions more to blame?

Cost of a pint in a pub: £3.50, give or take, depending which part of the country you're in. Cost of a tin from the corner shop: approx £1. At home you can play FIFA. In the pub you can watch Sky Sports News go round and round with the sound off.

Everyone agrees it's been getting harder and harder to persuade people to step outside their homes in the first place. "[Pubs] have got to work even harder to keep the customers they have, persuade customers to leave their homes, leave their very big TVs, the very cheap booze, and walk down the road or a bit further to the pub, and spend two or three times as much," says CAMRA's Tom Stainer.

Yet nobody I spoke to believed that the pub is necessarily dead – just the unimaginative way that pub owners, both pubcos and the so-called "family brewers" (Greene King, Marston's, Young's – actually all on the stock market and not particularly "family") – have been running them. "You've got to change, you've got to do things," says Dave Roberts, a brewer from Surrey. "While small brewers can change quickly, bigger companies have continued carrying on doing what they did last year."

Pub landlord Dave Mountford goes further. The pub owning industry, he says, "has no thought for what it should be doing to change the way it operates. I've worked in catering all my life... I've only worked in the brewing industry since 2007 and I have never worked in such a complacent, arrogant industry." Judging by the rave reviews his pub gets, he may have a point.

(Photo by Andrew Perry)

Instead of changing their game, pubcos and brewers have continued down the same road. The price gap between pubs and supermarkets grew even faster after the Labour government introduced a beer duty escalator in 2008, raising beer duty by above inflation each year. Yet instead of using their bargaining power to lower beer prices, pubcos simply passed the cost on to landlords. Last year, the beer duty escalator was scrapped and beer duty cut by 1p a pint. Did the cost of pub beer go down? It did not.

The result, predictably, is slow death for those pubs that never made huge profits, haven't been renovated and aren't able to deliver enough "shareholder value". Tenant landlords trapped in these pubs by their lease contracts get squeezed – and once dry, get evicted so the pubco can sell the pub.

"It is cheaper and easier to screw over tenants than it is to sell beer and go and recruit the right people to do it for you," Dave Mountford says. "Because it's harder and harder to do it well... because of the smoking ban, increase in prices... All of those things make the pub companies seek an easier way of making money." Many more pubs could survive, he believes, if it weren't for the pubco business model.

There's still hope. Last year, under pressure from campaigners like Mountford, MPs finally forced the government to change the rules, requiring pubcos to offer their landlords an option to pay market-rate rent instead of the beer tie. Pubcos, and their PR lapdog the British Beer and Pub Association, threw their pints against the wall, and could yet lobby to get the measure changed before it becomes law.

Social change has weakened the British pub, but it's arguably the outdated ownership model that needs to get with the times. This can only stop if closure-threatened pubs are run in a way that's fairer and responsive to change – probably under newer, more community-focused owners. If the British pub is to survive, publicans need to get smarter and their owners need to change up – or get out.


More Pubs:

The Last Piss-Up at One of London's Doomed Local Pubs

The Great London Gentrification Pub Crawl

What Kind of British Pub Do You Belong In?