What steps do they need to take?
Whether it’s a cosy local snug just off a village green or a vibrant chrome and glass city-centre bar with it’s own piano and regular jazz standards being belted out, the pub and bar are often considered the beating heart of British society.
But for a long time now they have borne the brunt of a range of blows so that for some it’s a surprise that they are still open at all, let alone being able to turn a profit.
They’ve seen rises in VAT and business rates (even temporarily offset they will still have to be repaid at some point in the future); big increases in property prices which they have to pay rent on – which has also increased.
They have had to dispose of beer stocks which has cost them financially especially as they have to be done correctly and legally.
The smoking ban caused them to invest more in outside areas even if the demand was minimal and they didn’t really have the footprint to accommodate it and not one but now two recessions which reduce the amount of disposable income customers have to spend on entertainment.
The latter is a key point as going to the pub is a habit and once broken, it’s hard to get back into the habit of doing things you once did unthinkingly. Especially if there’s a cheaper alternative.
Supermarkets have been in competition for pubs for years aiming to undercut them in both price and volume. Whereas the pub has a unique selling point of a communal and convivial atmosphere, a pub under coronavirus restrictions with social distancing and masks is quite a different proposition from a bouncing Saturday night boozer.
Even if customers have to spend more time at home, they can still enjoy a drink and as supermarkets’ range now expands into drinkers’ trendy favourites such as craft style beers, artisan gins and prosecco, the arguments for going to the pub are fraying.
Demographic changes are also having an effect. For anybody over the age of 40, we now live in the age of pre-loading.
This is where young adult drinkers buy their alcohol from supermarkets or off licences and consume it at home before venturing out to their pub or bar of choice. Because they have already imbibed a larger amount, they will not be spending as much in these places and will be simply topping up their buzz rather than creating it.
Every good publican is a pragmatist and the situation facing pubs and bars is clear.
More than 50% of late-night businesses including pubs, bars and nightclubs have seen a 60% drop in revenue since the 10pm national curfew was introduced on 24th September 2020.
Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA) said that pubs had seen an immediate impact on trading.
“If the curfew doesn’t work in reducing infections of the virus, it should be reviewed immediately to give pubs a proper chance of recovery.
“If it doesn’t work and isn’t removed then it will mean that hospitality businesses and pubs are unfairly singled out.”
The Night Time Industries Association (NITA), a pressure and promotion body made up of independent venues and entrepreneurs estimates that 60% of their members have reluctantly started to make staff redundant – before the winter Job Support Scheme is activated.
NITA Chief Executive Michael Kill is blunt when he estimates that the Winter Economy Plan is not enough to support the sector citing the combined effect of reduced economic support and ongoing restrictions of varying degrees of severity.
He said: “Our sector must not be under-valued. We need to challenge the government when restrictions result in the systematic closure of an entire Industry.
“In the coming weeks, without further support, we are facing a catastrophic collapse, which will see thousands of businesses and jobs lost.”
What can be done?
From the days of speakeasies in the prohibition era in the US, to the lost art of the after hours “lock in” in the UK – pubs and bars have always had an entrepreneurial streak.
Savvy landladies and landlords have always been one step ahead when it comes to helping their customers so there are several ways they can use their natural inventiveness and initiative to meet the moment and keep their doors open.
Service – with a social distance
Like restaurants, pubs that serve food can continue with some sensible changes and allowances made.
As well as adequate socially distanced table spacing for customers, an advance booking system can be brought in so footfall and traffic can be planned and monitored in advance of busy periods.
Food ordering itself can also be switched to an app with daily menus displayed here or printed on single use paper.
A lot of pubs are doing away with cutlery and condiments on menus and replacing them with hand sanitizers as well as giving staff PPE and making sure they are washing their hands regularly and making a public show of meeting the requirements to reassure customers.
The Beer Garden has always been a USP for pubs and now it can be a crucial tool to help them keep their services going.
It’s easier to keep socially distanced outside and it can also be designated as a performance area so pubs with music, comedy and live quizzes will be able to continue these popular activities as long as they conform to Covid-19 guidelines.
Karaoke and professional singing in particular will work but with some changes. Music volume should be turned down and even song choices considered to avoid singalongs which can increase transmission. It sounds like a small detail but an important one.
Pints to go
Pubs serving food can not only consider a food takeaway service if it’s already being cooked, but some enterprising establishments are offering a drinks delivery service within a small radius.
In this instance one staff member drives and the other keeps the drinks stable and takes them to the doorstop but it’s an example of changing staff roles to help keep the business going and keep them employed rather than being furloughed or even made redundant.
As well as the various different levels of government support available to all businesses including the newly updated and enhanced Job Support Scheme, there are others that are specifically targeted at pubs and other hospitality businesses.
They are temporary VAT rate cuts from 20% to 5% for four months until March 31st 2021 as well as VAT payment deferrals and business rates relief for hospitality businesses. This will be welcome news for city centre establishments that’s rateable value will be out of proportion with similar sized businesses in more rural or lower income locations.
Pubs are classed as hospitality businesses so can also apply for cash grants of between £2,100 and £3,000 per month which can be backdated to August for those businesses that had to close due to local lockdown rules but did not get any previous additional financial support for their loss of trade.
Even with the most ingenuitive solutions sometimes things just don’t work out.
The number of pubs in the UK has been gradually decreasing since 2002 and 2020 could see the largest number for years close their shutters for the last time.
Despite being so much more to so many people, a pub is also a business at the end of the day and as such has some options and solutions available to it as a result.
They can obtain an insolvency moratorium which is a relatively new legal protection that gives companies up to 20 working days “breathing space” to begin to restructure themselves and keep creditors at bay while they do it.
But sometimes even this option is insufficient to rescue a business with too much debt or other liabilities. The pub could even be solvent but the owner might decide that the coronavirus situation gives them the ideal opportunity to move onto other projects.
Other options are available
Not every business that goes into liquidation is insolvent but there are always options to make sure a business closes properly.
The bell ringing in a pub is always a sad sound because it means the end of your night there but sadly the bell is tolling for many within the industry themselves.
Even with financial support, until the Covid-19 situation is resolved, the outlook for pubs and bars is going to be cloudy for the foreseeable future and will give owners the time to consider bigger questions about their future ambitions and careers.
If you’re one of them then we can help you find some focus.
Get in touch with one of our expert advisors today and we can arrange a free virtual and free initial consultation held whenever you want it.
We can set out a slate of available options once we better understand your situation and whether you’re hoping to give your business a fresh start or are calling time on this particular venture.
No matter what you decide, we can advise and help you plan the most efficient and stress free way to get there so you can finally enjoy the drink you’ve finally earned.