A Measured View (April 2008)

A MEASURED VIEW

Shakeout

LIQUID ASSETS, A MEASURED VIEW, April 2008, COMMENTS

A new word entered the licensed trade lexicon in recent weeks – the ‘shakeout’. As in, “the on-trade needs a good shakeout” or “the acceleration in closure rates of community pubs is part of the shakeout in the on-trade”.

For some time now the GB on-trade has been reducing in size and shifting its focus (growth in food-led venues and those offering accommodation). A combination of licensing reform, smoking restrictions, increased discounting in the off-trade and a worsening economic climate has accelerated these trends. 2007 saw reductions in the numbers of nightclubs (-7.4%), circuit bars (-1.5%) and wet-led pubs (-1.2%) trading across England and Wales (with restaurant numbers up 2%). While Scotland has seen a 3% shrinkage in the on-trade post smoking restrictions.

Late night operators seem pretty sanguine about events. It has been a widely held view in our sector for some time that the over expansion of the YPV market in the 1990s would come home to roost eventually. That flood of new venues in to the market has meant that, for some time, supply has outstripped demand. Thus, many operators see the current reduction in numbers as an overdue correction. While the closures will clearly be painful for those involved (and often come about due to circumstances beyond even the best operator’s control) it should lead to slightly easier market conditions for those operators still trading – leaving them with just the Chancellor, various police forces and the supermarkets to worry about.

On the pub side, the extra emotional attachment to the great British boozer seems to be clouding the judgement of some commentators. Is it not simply the case that the number of pubs needed today is less than in times gone by? The erosion of Britain’s manufacturing base and society’s greater expectations of a father’s role at home both mean that fewer spaces at the bar are needed. Dad is now driving home from the office, helping put the kids to bed and collapsing on to the sofa to watch Sky Sports with a bottle of lager (two cases bought with the weekly shop).

But it does not have to mean that our job in the on-trade is to merely manage decline. Many savvy operators are coming to CGA now to scope out new markets, pick up sites (or chains) at very competitive prices or simply for guidance on reinvigorating their offer. Out of chaos comes opportunity. Know your market, customers and competition; excel at what you do and you can still build a business. Even in the middle of a shakeout.

From: April 2008 Issue

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