Tuesday, October 2, 2012

The Pub Sector In Downfall And Confronting Insolvency

The great British Pub is an iconic image throughout the world. Nobody does the village pub like the British. Its probably the thing that most expats miss the most. Nevertheless many are under threat and nearly 50 a week shut, many to never re-open.

It is a very depressing statistic, specifically for someone like me who is a genuine ale enthusiast. I like nothing better than traveling around the country finding new unspoilt pubs from those with chocolate box looks to the corner pub untouched in 60 years. Each has its own unique character. When your pub is in decline, find a pre pack insolvency practitioner as soon as possible. They can help out in a big way.

However they are an endangered species. The landlord today will generally find himself a tenant of a large pubco. The pubco is available to make money and hence rents are often exorbitant. Often also the landlord is tied into taking beer that the pubco sells on to him at a far greater price than he could buy himself direct. The result is that to make any money the cost of the typical pint may now be over £3. This isn't a price that can be sustained in the current economic malaise. This is coupled with the point that you can buy beer from a supermarket cheaper than you can purchase water. People are therefore buying supermarket beer and drinking at home.

The government with its policy of racking up beer duty in the misguided and blunt attempt to stop binge drinking is exacerbating the already dire situation.

The result of all this is that rates are too high and so people only go out now and again. As turnover falls so the need to raise prices creeps in to cover costs that leads to less product sales.

Eventually the rent cannot be paid and the tenant leaves, usually with a mountain of financial debt. Many ex landlords find themselves with no choice but bankruptcy.

Sometimes a bar can be saved if it's not tied to a pubco, via the pre-pack administration, but often it is a creditors voluntary liquidation with all the lease sold on to a brand new enterprise.

Specific pubs can survive and indeed the British Public house has been around in some shape or form for 100's of years and so it's almost a given that they can adapt and survive. The question is how many and in what form.

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