Is this the end of the pub?

Mourning his mother’s death and celebrating her life at the Old Neighbourhood Inn was the obvious choice for Martin Leach, 72, from Chalford Hill, near Stroud. 

The wood-beamed pub opposite his home had been woven into the fabric of the village for 150 years, so it made sense for 90 friends and family members to gather there in 2015 to say their final goodbyes to Nellie “Lilian” Leach.

But seven years later, the village would say goodbye to the Old Neighbourhood too; its only pub shuttering its doors in a scene playing out hundreds of times over across the UK – and at an accelerating pace.

“Entirely pissed off,” said Mr Leach, when asked how he felt about the closure of the pub, which had once played host to local bands, mobile bakeries, artisan vendors and an affectionate black Labrador.

“The pub was all that was left to represent that [village] community, and that’s gone. And I think it’s important to have that sense of community otherwise we just turn into a bunch of hamsters in cages.”

Some 239 pubs closed in England and Wales during the first three months of the year, according to government figures – 56% more than in the same period in 2023.

“There’s a sense of death by a thousand cuts or ‘what fresh hell is this?'” said Dr Thomas Thurnell-Read, a sociology expert at Loughborough University who has extensively researched pub closures.

“Everything cumulatively is building up and that’s why, sadly, there isn’t a magic bullet for the problems in the sector.”

Gen Z’s changing habits

Young people are more health and fitness conscious and more time-poor than their parents were, said Dr Thurnell-Read.

The financial burden of university is rising, meaning students are taking part-time jobs and reducing the social time when drinking habits could form, he said.

Freshers’ week, once a party-filled gateway to three years of drinking, has become a box to tick and leave behind.

“A generation of young people are finding other ways to socialise without automatically reaching for alcohol.”

COVID played some part in this trend, said Dr Thurnell-Read. His students who started their degrees during social restrictions don’t routinely go for big nights out or spontaneous, post-lecture pints.

Between 2011 and 2022, the proportion of non-drinkers increased from 16% to 19%, according to Drinkaware’s analysis of NHS data.

It’s a trend driven by 16-24-year-olds (26%) and resisted by adults aged between 55 and 64 (14%).

Less cash, more alternatives

“The younger generation don’t drink as much, that’s definitely a noticeable thing, but I don’t think anyone really does anymore. I don’t really see the culture of when people used to go out and drink – like properly drink,” said Simon Goodman, 44, owner of the Duke of Cumberland Arms, Henley.

The publican, who has been in the industry for 18 years, said that trade between the start of the year and the start of summer was “the quietest I have ever seen it”.

“People just weren’t around. It’s very bizarre after being in the business like this for so long.”

The public have little money left over after paying their bills and more places to spend it, said Tom Stainer, chief executive of the Campaign for Real Ale (CAMRA).

This was a trend that began in 2003, when the Licensing Act gave new types of venues the right to sell alcohol, not just pubs and clubs.

Now the cost of living crisis looms large. One in five people who would usually go weekly to pubs and restaurants said they were doing so less often in a survey by consultancy firm CGA in April.

At the same time, skyrocketing rents and mortgages have led to a squeeze on leisure time, with people spending longer commuting in order to afford homes in cheaper locations, added Dr Thurnell-Read.

“The big shift I think has been home entertainment. One of the other effects of COVID was it showed everyone how easy it was to get just about everything delivered to your front door,” Mr Stainer said.

This is a setback profoundly familiar to the manager of the Queen Inn, Great Corby, in Carlisle, which closed on 30 June.

Punters thinned out because they had a “vast amount of options at their fingertips” at home and supermarket alcohol was significantly cheaper, said Katie Wilkinson.

“It’s a big shame,” Ms Wilkinson said: “It means the village won’t have a pub anymore and a lot of people rely on coming in each night for that social aspect.”

She said this was particularly important for older people: “They see each other every night and now they won’t.

“I think as we move forward more and more smaller village pubs will be closing.”

The real estate incentive

As pubs become less profitable, companies that own the land are knocking them down to cash in on the real estate value “time and time again”, said Dr Thurnell-Read.

“Pubs are being closed against the will of the people who run them and often against the will of the community who need them.”

One of those community members is Tricia Watson, who moved to Chalford Hill, Stroud, as a new mum and used the Old Neighbourhood as a hub to connect with other parents.

Now a Stroud district councillor representing the area, she has joined a campaign group fighting to stop the landlord’s plans to convert it into a residential property.

The Old Neighbourhood has been deemed an asset of community value under the 2011 Localism Act, meaning local groups like the Chalford Hill Community Benefit Society must be given time to make a bid to buy it for the community. But, ultimately, the owner can reject it.

“The asset of community value regulations are absolutely toothless. So any community that wants to keep their pub going is at the mercy of the markets,” she said, adding the site is worth £300,000 more as housing than as a pub.

Without outside support, community efforts to purchase closing pubs have a success rate of less than 10%, according to the Plunkett Foundation, a charity promoting community-owned businesses.

“Sadly that picture is very recognisable,” said CAMRA’s Mr Stainer: “It was recognisable pre-COVID and COVID has accelerated the process.”

He added: “I think a lot of property owners are being tempted to take the fast buck.”

Pub companies often finance buying pubs in such a way that they need to make big returns to service the debts, which can either be done by raising rents or selling off parcels of land, he said.

“It is the tenants and the pubs that suffer because they are the ones that get chucked out of their business and often their homes.”

‘Daily struggle’ of doing business

The last four years have been “incredibly intense” for the industry, said Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA).

She lists off some of the “thousand cuts” Dr Thurnell-Read was referring to: the pandemic, war in Ukraine, pressures on supply chains, the energy crisis, cost inflation and customers who are far worse off that they were in 2019.

Mr Goodman, of the Duke of Cumberland Arms in Henley, lists the impacts of these wounds: “The price of food, alcohol, wages, electric, gas – it’s never-ending.”

He said: “It is definitely the trickiest the industry has ever been, I think. It is a daily struggle.”

Food costs, in particular, have been “insane since the beginning of the year”, rising by at least 15%, and in some cases doubling since 2019.

And they are completely unpredictable: “The prices can just change overnight, quite drastically as well.”

It’s not just food. Despite wholesale energy costs easing, Ofgem research published in March found 88% of hotel and catering businesses were still concerned about the impact of energy prices on their business.

Fixed energy contracts have come to an end at five Cornish pubs run by Chris Black and his husband Jason, who face new tariffs costing 25% to 50% more.

“Pubs are not particularly energy efficient. I think that can be a massive factor in where money is basically being wasted quite easily,” said Mr Black, 39.

He went on to echo an argument being made across the industry: While world events may not be in the government’s gift, taxation is, and pubs are being “overly taxed”.

“I don’t think there has been enough done to support pubs and that’s evident in the number of pubs that are closing,” he said.

Alcohol duty, a tax levied on booze, is worth approximately 54.2p in a pint of 5% ABV draught beer (38p in a 3.5% pint, 75.9p for 7%).

Food and drink served in pubs is also subject to 20% VAT (though this was reduced to 5% and 12.5% at different stages of the pandemic).

Pubs contribute 2.5% of all business rates collected by the government, but generate 0.5% of total business turnover, which CAMRA and the BBPA argue equates to a £500m overpayment.

Taken together, Ms McClarkin estimates £1 in every £3 goes “straight to the tax man”.

COVID loans hangover and WFH

During his research, Dr Thurnell-Read was told by many publicans they could have survived COVID or the cost of living crisis – but not both.

The term perfect storm is overused, but for CAMRA’s Mr Stainer, it’s the only appropriate description.

The pandemic burned through pubs’ savings and forced them to take on more debt, just before the cost of energy and ingredients rose dramatically and the amount of money customers had to spend plummeted.

Now, loans taken out and rents deferred during COVID are being called in, said Mr Stainer.

“Many pubs have survived COVID but maybe are in danger of not surviving the long-term effects of the lockdown.”

Introduced in March 2020, the Coronavirus Business Interruption Loan was a scheme whereby the government would encourage banks to loan up to £5m to businesses by guaranteeing 80% of the money and paying any interest or fees for the first year.

“It is definitely a contributing factor to these failures, the inability to be able to pay back these loans,” said Ms McClarkin, of the BBPA.

She said some smaller brewers had gone into administration because they “simply cannot pay them back”.

Loans aren’t the only COVID hangovers facing pubs, according to Ms McClarkin: “Working from home culture has definitely damaged the pub sector, to the point where some pubs simply don’t open Monday, Tuesday.”

The pub lunch has dwindled in cities and big towns, and some establishments are choosing to close early on weekdays and open earlier on weekends, she said, as customers switch to less frequent outings.

Fewer, more costly staff

Staffing has been a problem since Brexit, says Jane Pendlebury, chief executive of the Hospitality Professionals Association (HOSPA).

She explained the end of freedom of movement had made it more difficult to find staff – and choose the right staff.

“The friendliness, the smiles, charm, the willingness to pour a drink or deliver some food with a smile on your face will take them [pubs] a long way, but… if you can’t get the right staff then you’re not going to be delivering that.”

Minimum wage increases, while great for workers, have added to the outgoings for struggling pubs, she said.

April’s increase (£1.02-£1.26 more per hour for each employee) will see the sector’s salary bills rise by £3.2bn, according to trade body UKHospitality.

“People’s wages have gone up, and that’s absolutely acceptable and they should go up, but when it all adds up in this industry, when do you start going out and you’re paying over £50 on a steak?” said Mr Goodman, of the Duke of Cumberland Arms.

Cornish publican Mr Black said: “We’ve run a lot tighter on labour to try and keep the cost down because labour costs can be real money down the drain if you’ve got too many staff on at the wrong times.”

Exhaustion

For HOSPA’s Ms Pendlebury, it’s important to remember pubs are run by people – and they have a limit.

“People that run pubs, own pubs, are just exhausted.

“They were enormously under pressure [during COVID] and then as the guests came back, they were more difficult to deal with because their expectations were so high.

“So I think they are at their wits’ end.”

It’s the smaller, more independent pubs that are closing, she said.

The scale of pub companies means more favourable borrowing rates, supply-chain priority and better value for money when bulk buying stock like menus, cutlery and loo roll, she said.

They may have their own property managers – rather than more costly local tradespeople – and staff to manage their online reputation.

“If it’s all chains then we would, probably, ultimately lose some of our character as a country,” said Ms Pendlebury.

It’s not all bad

Walk across the River Ver, St Albans, north of London, almost 1,000 years ago and you would have seen the same building where Ronan Gaffney serves pints today.

Pop into Ye Olde Fighting Cocks for an ale 400 years ago, and you might even have bumped into Oliver Cromwell, who was said to have spent a night at the inn during the mid-1600s.

But centuries of history could not save the pub in February 2022, when the Fighting Cocks, the only inn to be officially recognised as the oldest in Britain, closed (though this was a title so disputed in the industry that Guinness dropped the category entirely in 2000).

Mr Gaffney, 27, and his colleagues lost their jobs in the pub where he – and generations before him – bought his first pint.

But this isn’t the story of another lost community asset: the pub reopened two months later, and Mr Gaffney was there to welcome the community back – with a promotion.

The establishment’s manager and head chef had banded together to take over the lease with a third business partner.

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“It was super rewarding being able to reopen the doors and have been back in,” said Mr Gaffney, now general manager.

“It was lovely to see the local community come in and say they’re glad we’re open again. A lot of people do have a lot of memories in this pub.”

The pub is now in a much for comfortable position, though they must remain “very cautious on a daily basis”, he said.

He put its success down to attention to detail, big events, pricing and luck.

“Bars can’t get by on day trade anymore: birthdays, weddings and other large bookings are essential,” he said.

“That is definitely one thing that our pub is not only very good at, but we’re also almost reliant on it for a certain amount of our turnover.”

Unless your pub is next to a train station, food is a must: “Being a simple boozer anymore doesn’t really seem to exist.”

He said he pays close attention to how staff are trained, products are bought and prices are set.

A lot of alcohol and food will return very slim – if any – margins, so you’ve got to make up for it on soft drinks, crisps and nuts, he said.

The same applies to the low and no-alcohol products that have become so popular among younger people as they steer away from heavy drinking.

“It was quite strange,” said Mr Gaffney.

“It’s not too rare for a pub to close or reopen these days, but it was quite rare to be able to be on both sides of that.”