This new blog post is unfortunately not a happy one.Having just listened to the Chancellor's statement in the House of Commons this afternoon and his announcement of a cut in VAT to 15% from the 1st December 2008 makes me wonder will this help in any small way the Pubs and Bars that are suffering so badly at the moment?
Unfortunately I think not.Having travelled throughout the UK this year and visited 100's of Pubs I have been most upset to see the number of establishments that were either up for sale or closed up completely. One town in Cornwall had 1/3rd of it's Pubs closed since I had last visited 18 months ago.
The consensus of opinion amongst the landlords I have spoken to is to blame the supermarkets with their low cost drink. I have to say that I am in agreement some tied tenants I know cannot purchase drinks from their suppliers for what they could get them for in their local Tescos. A ridiculous state of affairs!
What can Publicans do?Over the last 10 years Pubs have changed considerably and the emphasis on providing good food has become a major influence in the general public's decision to favour a particular establishment, but come on not every Pub in the land can become a Gastro Pub!
Other publicans have decided to provide more live entertainment but this comes at a price, assuming you were to employ a solo singer which typically would cost £120 - £140 for an evening. This entertainment would have to bring in an additional £250 - £300 just for the landlord to break even. A real life example would be; Did the pub sell an
EXTRA 100 PINTS, the answer is probably no. If the entertainment were to be provided on a Friday or Saturday night, traditionally the busiest nights for most Pubs, then chances are the Pub would be busy with it's regular clientele and whilst the regulars may stay a little longer it is doubtful they would drink much more than they would normally. For the entertainment to attract people from further afield then the Publican would have to advertise. Even a small advert in a local regional newspaper will cost between £30 - £40 making the additional revenue needed rise to £310 - £390 so it get worse. Of course I am writing this from a rural perspective, I appreciate that in larger towns or cities where the cost of getting to and from the Pub or Bar is considerably reduced live entertainment can and does work profitably, but in rural areas where the cost of a taxi would probably have to be added to the evening's drinks bill an evening out at the Pub has now become for some prohibitively expensive.
So will the 2.5% cut in VAT make any difference?Even if the cut is actually passed onto the public the 2.5% is not going to make much difference to a night out at the Pub. Let's assume that a typical non binge drinking couple come out for a meal; starters, main and dessert and a couple of drinks each.
Before 1st Dec 2008
2 * Starters @ £4.00 = £8.00
2 * Mains @ £10.00 = £20.00
2 * Desserts @ £5.00 = £10.00
2 Glasses Wine @ £3.10 = £6.20
2 Pints Beer @ £2.60 = £5.20
Total £49.40
After 1st Dec 2008
Take 2.5% off the total gives a saving of £1.24
I really do not think this is going to make any difference to a typical couple coming out to the Pub and this is assuming that the 2.5% is passed on, but think about the logistics, the Publican is going to have to re-price his menus and re-print them, not a 5 minute job. Plus many Publicans are using the flat rate VAT scheme, how is this going to work? All in all the 2.5% VAT cut is not going to make any big difference except to say the psych0logical one. You know; the feel good factor, if the media back this as a good step along with the other changes announced then people may actually come out to the local for a couple of drinks and that is all that is needed in many rural pubs, just 5 or 6 more customers each evening can and will make the difference between life and death for your local Pub.
Just listened to the Radio 4 news summary and it was annoucned that the cut will make no difference to drinks or fuel prices!
I hope my next post will be in a more cheerful vein.