Topic: Ban Damage Page 4
68% of landlords want end to smoking ban
Wednesday, 23 April 2008
64% of pubs in England are losing trade since the smoking ban was
introduced, according to a survey published today by YorView on behalf of
pro-choice group Freedom to Choose. Of those establishments, 98% blame the
smoking ban for some or all of the loss of trade. Many landlords report that
they have cut staffing levels or opening hours. One landlord commented "the
smoking ban is just driving people out of pubs". Problems with providing outside smoking areas were reported by 47%, due to
cost, planning restrictions, noise or a lack of suitable space.
Despite concerns from 58% of landlords about passive smoking being a danger
to staff, many considered the health risks to be exaggerated, wanted
alternative solutions or believed that owners and workers should have the
right to choose.
68% want the ban to end and for choice to be restored to the landlord. One
commented "I think it should be up to the individual premises whether to be
smoking or non-smoking." Smoking rooms were cited as the most preferred
option.
The survey also revealed that 97% of publicans feel that the government is
unsympathetic towards the problems faced by the hospitality trade, while 96%
expect further restrictions to be imposed. "They listen too much to liberal
do-gooders and not the views of the general public" complained one
respondent. Cheap supermarket booze, taxation, red tape and measures to
combat binge drinking were amongst further sources of concern.
The ban is so unpopular with landlords that 35% say it will change the way
they vote at the next General Election. 19% of these plan to switch from
Labour to Conservative and 43% to 'other', with a party that opposed the
smoking ban as the most preferred cited option for that group. "'I would
vote for whichever party reassessed the smoking ban", one landlord
commented.
Colin Grainger, Chairman of Freedom to Choose says: "This survey shows in no
uncertain terms how devastating the ban has been for those in the
hospitality industry. It should be a clarion call for politicians of all
stripes. The message is loud and clear: the ban is disproportionate to the
perceived harms of second hand smoke."
Godfrey Bloom MEP, author of the foreword of the report, said "With over 20
pubs a week closing I feel a major cultural platform is being removed from
the British people."
2,600 pubs and clubs from all over England were surveyed via e-mail and also
through manual responses.
The Freedom to Choose survey follows recent figures from the British Beer
and Pub Association showing that pubs are closing at the record rate of
nearly 4 per day. Despite claims by Health Secretary Alan Johnson that the
smoking ban will not create long term economic problems for pubs, the
Freedom to Choose survey confirms findings from trade publication The
Morning Advertiser that three times as many licensees (57%) blame the ban
for lost trade as those citing consumer-spending slowdown (19%); furthermore
the Morning Advertiser affirms that support for Labour amongst landords is
at an all time low of 3%, with 65% saying they will vote UKIP, the only
party promising to oppose the ban.
Freedom to Choose seeks to amend the smoking ban to allow freedom of choice
for businesses and their customers, in line with the majority of EU
countries, and to advance public education about smoking bans
www.freedom2choose.info
ENDS
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Notes to editors
1. The full survey report can be downloaded here:
http://www.freedom2choose.info/docs/tsgv1.pdf
2. BBPA report:
http://www.beerandpub.com/newsList_detail.aspx?newsId=235
3. Alan Johnson quotation:
http://www.morningadvertiser.co.uk/news_detail.aspx?articleid=57809&categoryid=36
4. Morning Advertiser survey results:
http://www.morningadvertiser.co.uk/news_detail.aspx?articleid=59396
http://www.morningadvertiser.co.uk/news_detail.aspx?articleid=59284
Sky-high prices, flat beer and no fags: how the pub bubble burst
Landlords are faced with more and more reasons for calling time
April 9, 2008
By Simon BowersAlmost four pubs a day are closing for business, taking down their swinging signs and their hanging baskets and boarding up their windows. It is the most powerful signal yet that one of Britain's oldest, most resilient industries is in a dire state.
Squeezed by the smoking ban, cheap supermarket booze and soaring operating costs, thousands of sticky-carpeted boozers are left unloved and empty. The industry is awash with whispers of a rising tide of publicans unable to make ends meet and handing back the keys to big landlord companies.
In January, Massive Pub Company, a cluster of about 33 mainly leased London locals, including the Tup chain, was forced into administration by spiralling debts and tough trading conditions. It had been run by Peter Linacre, one of the most outspoken critics of the landlord companies - led by Punch Taverns and Enterprise Inns - that have dominated the industry in the past decade. In November, he wrote in the Morning Advertiser trade daily suggesting these pubcos were facing a rude awakening.
"Those of us who run pubs have been saying for a while that business is getting harder. Making money from pubs is really tough. And now perhaps renting pubs to people who can't pay the rent - this has a familiar ring from another sector in the headlines - is becoming more prominent.
"Maybe it is here, the tipping point in the pubco sector, when the reality finally hits home that the growth in rents is not just over, but it's a bubble waiting to burst."
Paul Wigham, managing director of Kent-based The Bar Group, is another concerned lessee, running about 30 locals. "Large pubcos have taken large amounts of securitised medium-term debt to acquire pubs over the last 15 years and the level of debt they have been able to receive is based upon rental income, which includes beer and machine profit. With the beer market going into steep decline - and some industry sectors are privately talking about recent volumes being 12-14% down - their ability to service or repay that debt is bound to be impaired."
Last week Globe Pub Company, a 437-house business owned by the property tycoon Robert Tchenguiz, reported an 8% fall in quarterly beer sales. Of more concern is that the group is now trading with 35 sites boarded up or not generating rents and 10 pubs occupied by tenants on rent concessions. Most analysts believe Globe pubs to be the small, less profitable boozers usually worst affected when trade slows. Nevertheless, there remains concern that Globe's woes could be indicative of wider distress.
"The sector is not attractive to many entrants now," argues Wigham. "And that is an issue for pubcos who need operators to maintain their income for the sites that they own. The costs of running a bar are spiralling and anyone with a calculator can see how difficult it is to make money at it."
Last week Enterprise boss Ted Tuppen repeated his recent message to shareholders that "testing times" meant "rent concessions and special discount schemes" were becoming increasingly appropriate. It is not a message investors want to hear - Enterprise, Punch and many other pub groups have seen their share prices halve since May.
The pubcos are quick to explain, of course, the drop in trade is due to external factors. They are not to blame if Tesco is offering Foster's multipack deals at prices equivalent to 58p a pint. Nor can they be held to account for the government's decision last year to impose a smoking ban. The craze for £500-payout video roulette terminals in betting shops, taking trade from lower-prize pub fruit machines, and the rising cost of Sky's sports coverage are also out of their hands. As was the chancellor's decision last month to raise excise duty rates on booze.
There can be no doubt that the industry has faced a torrid time, but not all of these headwinds came as a shock to shareholders. Why, then, have shares dived - especially as investors have traditionally favoured freehold-rich pub stocks in an economic downturn?
In large part, the answer can be traced back to the staid pub industry's engagement over the past 10 years with some of the City's most sophisticated financial engineers, led in the early years by Guy Hands, then at Nomura.
Hands and his peers realised that stable cashflows from pub rents could be heavily borrowed against, attracting extremely low rates of interest. It was a formula that seemed to unlock a vast pool of cheap money and heralded an era of big deals and soaring asset prices.
The fact that beer sales - the core source of pub profits - had been in slow but steady decline for years was regarded as a side issue. Nomura, the Japanese bank, came from nowhere to become, for a while at least, Britain's biggest pub landlord. Investor expectations of the returns that could be generated by the humble pub had been transformed.
Today, the landscape looks very different. Asset values are dropping, the decline in beer sales has steepened and the credit-rating agencies have started to flag up concerns. For the new generation of debt-fuelled landlords, the first signs of a hangover are setting in.
One bank executive who works with several pub company clients said: "It's interesting times. There will be an increasing number of tenants out there going out of business ... It's really the first time ever the pubco model has been tested."
He believes Punch, Enterprise and other landlord groups with high-quality pub estates remain well placed to weather the storm - not least if the chancellor allows them to convert to real estate investment trusts, a regulatory trick that would in effect wipe out most of their corporation tax. Further down the food chain few doubt there will be a marked acceleration in individual tenants and small lessee operators going to the wall. The number of pubs will continue to shrink.
http://www.guardian.co.uk/business/2008/apr/09/fooddrinks.retail1
Ulster drivers face ban on smoking at the wheel
Guardian - UK
Department of Environment sources said the minister hoped to have the smoking ban in cars imposed in two years. A spokesperson for the DoE pointed out that ...Another pub chain falls victim to the ban on smoking
Independent - London,England,UK
But now they have become victims of the clean-air culture brought about by the smoking ban. The Laurel Pub Company, owner of some of the country's ...Shopkeepers fuming over new smoking ban plan
Shields Gazette - South Shields,England,UK
According to the Office for National Statistics, the proportion of adults who smoke has dropped from 24 per cent to 22 per cent since a smoking ban in ...
Another pub chain falls victim to the ban on smoking
By Martin Hickman, Consumer Affairs Correspondent
Saturday, 29 March 2008
For more than a decade, the names Slug and Lettuce, Hogshead, Ha Ha and Yates have spread rapidly, colonising some of the country's prime city centre and suburban locations. But now they have become victims of the clean-air culture brought about by the smoking ban.
The Laurel Pub Company, owner of some of the country's best-known high street bar brands, has collapsed. The development comes as breweries and pub chains blame the ban for encouraging smokers to stay at home rather than visit their local.
Some 388 pubs were placed in administration this week, though a rescue deal orchestrated by the company's colourful owner, the Iranian property investor Robert Tchenguiz, will ensure the brands survive.
According to the British Beer and Pubs Association, the smoking ban in England and Wales combined with the credit crunch and a decline in drinking are responsible for closing pubs at their fastest rate in history – 27 a week.
The Massive Pub Company, which owned the Tup chain of pubs in London and the Sports Café chain, have both been placed in administration, while Regents Inns, owner of the Walkabout chain, has been forced into the sale of 94 bars.
In the past two months, Marstons, Greene King, Fuller, Smith and Turner and Wetherspoons have all announced their profits have been hit by the ban on smoking in public.
The Government outlawed lighting up in restaurants, bars and other public spaces on 1 July last year.
Publicans installed awnings and patio heaters to encourage smokers to go to the pub. However, commentators say that has failed to prevent the ban hitting the £15bn-a-year industry, with traditional "wet-led" local pubs the worst affected. Mark Brumby, a drinks analyst with Blue Oar Securities, estimated that the smoking ban had cost between 3 and 4 per cent of sales – or about £600m.
He predicted, however, that some pubs experiencing falling sales would successfully reinvent themselves as family friendly destinations. But there would be winners and losers.
"Within the industry the family-friendly, food-led pubs in places such as Hemel Hempstead and St Albans may never lose sales. Some of the city boozers may go down by 25 per cent, and never recover," he said.
The collapse of the Laurel Pub Chain on Thursday indicated the impact of the smoking ban was spreading to suburban locations.
Alastair Beveridge, of the administrators Kroll, said: "Low consumer confidence combined with the impact of the smoking ban has led to difficult trading conditions in the leisure sector."
On the same day, two new companies, set up and bankrolled by £50m and £60m by Mr Tchenguiz, Bay Restaurants and Town & City, bought 288 profitable outlets from Laurel.
According to The Publican, the remaining 90 loss-making pubs in administration – five Slug and Lettuce, 11 Ha Ha, 40 Yates and seven Litten Tree – owe £8.6m in unpaid rent.
The pubs have now, in effect, been cut adrift from Mr Tchenguiz's empire, with the expected loss of about 800 jobs.
How new law hit the trade
"Since the half year, the slowdown in consumer spending and input price inflation on top of the smoking ban have made operating conditions more challenging." - Michael Turner, chairman of Fuller, Smith & Turner, 1 February
"It has had greater impact than some felt it would." - Bob Ivell, chairman of Regent Inns, 5 February
"The half year to 27 January 2008 was challenging ... the bans resulted in a strong growth in food sales but a decline in bar sales." - Tim Martin, chairman of J D Wetherspoon, 7 March
"They are struggling to find the new consumers that were expected to come in after the ban: older drinkers and families." - Caroline Nodder, editor of The Publican, 28 March
http://www.independent.couk/news/uk/home-news/another-pub-chain-falls-victim-to-the-ban-on-smoking-802342.html
Read more: UK Ban Damage Page 3