Another pub chain falls victim to the ban on smoking

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The Independent Online

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