TO THE dismay of the brewers, there is little evidence that victims of recession are drowning their sorrows in the pub. Last year one estimate had the volume of beer consumed in the UK down by 8 per cent. The brewers have lived through some turbulent times in the past five years.
However, the recession and the aggravation caused by the Monopolies & Mergers report pale by comparison with the long-term problems of the Beerage: not least that its best group of customers is dwindling and the popularity of beer and even pub-drinking itself is falling steadily.
Brewers always relied on volume consumption to survive, and during the Eighties the seemingly relentless rise of lager kept the pumps flowing. However, those who consume the most - the young male 'session drinkers' who regularly put 10 pints down their necks on Friday and Saturday evenings - are a diminishing group. The number of those aged 15-19 in the population dived from 3.8 million in 1967 to 3.2 million last year and will fall to 3.1 million by 1996.
Beer is in long-term decline. It took 73.8 per cent of the total UK alcohol market by volume in 1960; by 1989 that had dropped to 54.6 per cent. At its peak in 1979 UK beer production was 40.5 million bulk barrels, having grown from 24.8 million in 1951. It is now thought to be around 36 million barrels, but still provides the Government with a cheaply collected pounds 4bn a year in tax and duty - a very sore point with the brewers.
David Ankerson, who used to be trading director of GrandMet's Chef & Brewer arm, is not optimistic about the industry's future. 'Time is at a premium these days. It's a currency, and people value their time as an asset. So wasting time in a pub is socially unacceptable - there is so much else to do. Pubs have got to be interesting to attract custom.' All the brewer's research is showing that bog- standard 'boozers' are no longer 'interesting' to people. Fewer and fewer drinkers are willing to while away evenings at the bar, and many of those who do - such as lonely pensioners - make a half last two hours.
A host of other trends are taxing brewers: fathers wanting to spend more time with their children - since children's rooms or properly appointed gardens at pubs cost money; rural depopulation and drink-driving legislation; the attitude of women towards pubs (often reluctant, appalled by unpleasant lavatories); the perceived unhealthiness of drink.
One thing is certain: the nation is 'over-pubbed'. Weaker pubs are closing and will continue to do so for the foreseeable future. There are roughly 68,000 pubs in Britain now, and Mintel is thought optimistic by many in forecasting the number will be down to 63,000 by the end of the decade.
'The average British individual has a five- minute walk to a pub in 1992,' says Wess Van Riemsdijk, the head of Whitbread Inns, 'and we think that walk will be 13 minutes by the end of the decade.'
Despite now embracing demographic subtleties and children, higher standards and shrewder marketing, the selling of alcohol remains a rough old business. Huge spending on electronic cash registers has yet to eliminate all the fraud and petty thievery that dealing constantly in cash precipitates.
To illustrate the ethos, this joke was told to me by a director of one of the big five brewers - a man running a pounds 500m business: 'If you see a barmaid discover a pounds 10 note on the floor, do you employ the one who puts it in her pocket, the one who puts it in the tip glass or the one who puts it back in the till?' And the answer? 'You employ the one with the big tits.'
Those pubs that survive are likely to increase in variety. Already the big five brewers are introducing branding to differentiate parts of their remaining estates. In rural areas, the pub / restaurant hybrid is fast becoming the norm. Elsewhere, brewers and landlords are taking various routes to escape the drinking squeeze - some are radical, others are gentle variations on the traditional theme. We selected four pubs that show how different the approaches can be - and how difficult it can be to succeed.
TGI FRIDAY'S: This chain is at the radical end of the pub-of-the-future spectrum. All peach daiquiri and 'PS I Love You' cocktails, bottled Rolling Rock and Combo Skins ('a combination of loaded potato skins and potato skins filled with spicy beef, black olives, jalapenos and Monterey Jack cheese'). It may be a 'Nineties leisure experience' rather than a pub, but the young people who pack the premises to the roof on Friday and Saturday nights would have been in the pub 20 years ago. And they do not mind paying pounds 2.20 for a bottle of Michelob if the pounds 250,000 air-conditioning system means their clothes do not reek of cigarette smoke by the end of the evening. The concept of Friday's, like much Nineties-style brewers' thinking, is about 'added value'.
TGI Friday's started as a singles bar in New York in 1965, and the focal point is still the sunken, square cocktail bar in the middle. The raised tables that surround the bar area are at just the right height for communication between previously unacquainted singles. Whitbread brought the concept to Britain unaltered in 1986, as a franchise from the Carlson Hospitality Group. The original American interior design is meticulously reproduced in each restaurant - Tiffany-style lamps, polished wood floors, half an eight-man rowing scull and other carefully positioned 'elegant clutter'. Like a pub, Friday's has its regulars: 81 per cent of customers are frequent attenders and 9 per cent of customers provide 50 per cent of sales. Unlike pub custom, however, just over 50 per cent of the clientele are women.
At Friday's, however, you won't be served by a buxom part-timer off the street in search of some supplementary income. Before the evening session, all the Dub Dubs, as the full-time waiters and waitresses are known, assemble in the back yard for a pep talk from one of the five managers. Their target for tonight is pounds 4,000 and they are given a little reminder of the need to write out order tickets clearly. They are further reminded of the weekly target of pounds 49,000, and that it was at this point last year that performance tailed off slightly.
On top of the basic pounds 3 per hour, Dub Dubs can achieve performance bonuses of 4 per cent of their evening takings and 6 per cent of daytime sales if they pass the threshold. Everywhere behind the scenes are sales graphs and bar charts, on computer screens and pinned to the wall, showing performance and targets for individual Dub Dubs and the restaurant as a whole. As they do the compulsory 'Puppy Dog' squat before each customer's table, they must be among the most highly motivated serving staff in the catering business, and Whitbread prides itself on hanging on to them. Business at Friday's in Reading is up roughly 20 per cent on this time last year. Gordon Gekko would have approved of this style of catering: 'It's bucks that count, kid. All the rest is conversation.'
If Friday's has a problem, it is that it costs a lot of money to set up and run. The Reading building cost pounds 2m to establish and there are 96 staff to pay - the American service culture does not come cheap. Each restaurant costs Whitbread pounds 100,000 in service training before it even opens. When it comes to profit, a branch of Friday's will still be easily outstripped by a couple of well-run but slightly shabby drinking machines, or Community Inns, as they are known, on a council estate. 'It's never going to be the biggest part of Whitbread,' admits Mark Derry, Friday's marketing director, 'but we can transfer a lot of what we are learning here about service into pub management.'
The Crystal Palace Tavern: Tuesday night is Quiz Night at this traditional pub in East Dulwich, south-east London. While they gently addle their brains with beer, customers are asked how many stars there are on the flag of New Zealand (four). The winning team gets pounds 15. Brian Hockney, the landlord, has been a publican for 21 years and is popular with his varied bunch of regulars because he runs a highly convivial, relaxed establishment. His Taylor Walker cask-conditioned ale at pounds 1.39 a pint has won him many Campaign for Real Ale fans, and for the past two years running he has won Camra's South East London Pub of the Year award.
The Tavern is profoundly traditional and appears to be prosperous: a comforting place for those who are disturbed by change. Yet even here business is tough at the moment. Punters are buying cans and hiring a video to keep leisure costs down, and Mr Hockney is feeling it. His is a large detached building built by the Crystal Palace designer Joseph Paxton for the workers who transported the Crystal Palace from Hyde Park to Sydenham. Last year it was refurbished at a cost of pounds 70,000, and Mr Hockney's masters at Taylor Walker want to see some of their investment back. (Taylor Walker is the London retailing arm of Allied Breweries and has 700 pubs within the M25 - 450 managed, like Mr Hockney's, and 250 tenanted.) Refurbishment costs will be a growing problem for the Beerage in the Nineties. A new look used to last seven years; now a refit is often necessary every three to five years to keep up custom.
To keep business buoyant, Mr Hockney is learning marketing at a rate of knots. Tuesday night is Quiz Night, Thursday night is Music Night and at the beginning of August it was Christmas Dinner. 'You've got to do gimmicks all the time these days,' he groans, supping a glass of non-alcoholic lager. 'Twenty years ago I'd just open the doors and try to keep up with pulling the pints fast enough. Now I've got to do something mad once a week to try to reach the pounds 7,000 target. There's a lot of pressure on, but I'm a back- street local and I just can't manage it at the moment.' He works a 12-hour day, but tries to keep Wednesday afternoon free for bowls.
The other big change he has experienced is the inexorable rise of food (86 per cent of pubs now serve food, making up 40 per cent of UK catering outlets). 'We used just to do a pasty and a sandwich. But now we're really geared up - the wife cooks it all. We've got gammon, egg and ham and chips, pizza and chips, pasty and chips . . . It's pretty well all chips, I'm afraid.' An ex-sailor, Mr Hockney runs a tight ship and the Crystal Palace Tavern is in no long-term danger, but he is keen for good weather and better economic news.
S & N Roundhouse: Keith Carini, 33, has been putting in a lot of practice of late on the blackboard with his Chunky Chalks from the Early Learning Centre. Mr Carini is the manager of the Roundhouse in Covent Garden, a Victorian-style alehouse and a new venture for its owners, Scottish & Newcastle. In its way, it is as radical as TGI Friday's: S & N has decided the way forward is back to the past.
Mr Carini's boss, Ian Larmour, a self-confessed 'hard-nosed git' of an Ulsterman, will be annoyed if his manager is caught using inferior chalk. Mr Carini's rulebook - the brand operations and training manual - is several hundred pages long and weighs 2.5kg. Everything is done by the book. Mr Carini is not complaining, however, and enjoyed the intensive three-day training course, which included two hour-long sessions on 'Blackboard Writing - Principles' and 'Blackboard Writing - Practical' with a professional signwriter. 'I thought, this is the future,' Mr Carini says. 'It's something I've been looking for for a long time. I've seen plenty of shoddy units.'
The Roundhouse is now part of an S & N pub brand called T & J Bernard. (The name is a revival of a medium-size Edinburgh brewer that S & N bought in March 1960 and had closed by the end of the year.) With the operating motto: 'A pint of the unusual,' the T & J Bernard brand is taking S & N into what it hopes will prove a lucrative real ale niche. With 8 per cent of the total UK beer market, real ale is also declining, but at half the rate of keg beer. There are two styles within the brand: Victorian classic style and Victorian kitchen style. Bar staff wear thigh- length aprons and grandad shirts, and they are expected to be conversant with the intricacies of secondary fermentation.
'This is not a bog-standard male boozer unit with cursing and swearing, throwing darts and reading the paper,' says Mr Larmour. 'People are paying for 20 minutes' drinking-time at pounds 2 a time.' Keith Carini nods. 'Take back that pint,' barks Mr Larmour as Mr Carini places what looks a perfectly fine glass of Theakston's in front of me. 'I can see sediment in it.' His manager flushes and obliges. Mr Larmour is also 'fanatical' about German wheat beers, and a wide selection is arrayed on the shelves.
For quality and presentation control, this rigid a pub has to be a managed house. Over the road is Tesco's new Covent Garden store. They know a thing or two about rules at Tesco. 'We've got an awful lot to learn from multi-sited retailers,' says Tim Heald, S & N's planning director. 'But you've got to be careful - pubs do have individual personalities and supermarkets don't'
There are so far five T & J Bernard trial sites, and S & N aims to have converted 27 more by the end of the year. If all goes well there will be 70 new brand members by the end of 1993. The exercise does not come cheap. The decking out of the Roundhouse cost pounds 140,000, and the average cost per pub is budgeted at pounds 100,000. With such sums indebted, the pressure is on to perform. So far the Roundhouse has been humming with all the right sort of people: men in suits love it, but labourers and visiting football fans sniff and walk on by. Before the refit, the weekly take was a modest pounds 8,000 a week. The target was set by Mr Larmour at pounds 10,000. Last week Mr Carini chalked up pounds 17,000 with his Chunkies.
The Lord Wellington: This is a pub that failed.
Roger and Susan Fortey were exactly the sort of people Lord Young wanted to bring into the pub business. For 20 years they had toiled in their fish-and-chip shops, opened a snooker club, and by 1989 had pounds 150,000 saved towards their own free house. They set their hearts on The Lord Wellington, a run-down Whitbread establishment in Upton Bishop near Ross-on-Wye. Whitbread's tenants were being retired. 'It was completely full of damp and hadn't had any real money spent on it for 20 years,' says Susan Fortey.
Perhaps unwisely, the Forteys did not set too much store by the fact that the space under 'Annual Barrelage' on the agents' details was left blank.
The Forteys put in a tender against competition and offered pounds 180,000. NatWest lent them pounds 117,000. Whitbread was willing to come in with pounds 80,000 at an attractive 6 per cent, provided the Forteys entered into a supply agreement for beer, cider, wines and spirits. (This practice was banned under the first draft of the MMC report, but the Government later did a U-turn.) Roger Fortey hired a mini-JCB and started gutting his new pub. The refurbishment took six months.
Things started to go awry. The repairs needed on The Lord Wellington proved more extensive than had first been thought necessary: a new sewerage system to divert a stream that ran under the disused barn, which was to be turned into a restaurant, cost pounds 20,000. By the time they had finished, the cost of The Lord Wellington had reached pounds 350,000. 'We did misjudge it all slightly,' Mr Fortey admits.
In common with many country pubs, The Lord Wellington found the stricter enforcement of drink-driving laws made things hard from the start. The Forteys noticed that the well-appointed Whitbread Beefeater two miles down the road seemed to be doing very well, and wished some of its business would come their way. An unwelcome guest that did come their way, however, was the recession. Business dropped off and the Forteys fell behind first with the VAT and then with their repayments to the bank. Trade was not helped by the fact that as a free house, the Lord Wellington was ineligible for any of the extremely attractive discounts on beer currently offered by brewers to their managed and tied pubs to stimulate demand.
NatWest's nerve gave way, and it sent in Cork Gully. Mr and Mrs Fortey are now managing what was their own pub, working an 84-hour week for pounds 50 each. They owe an extra pounds 50,000 to a list of small businesses, and even their solicitor has taken them to court for his fee. 'We put in everything we'd made in the last 20 years. Now we're going to lose everything,' Susan Fortey says. The worst news is that the estimated value of The Lord Wellington is now pounds 175,000, and it may well have to sell for less.
The Forteys feel no bitterness towards Whitbread; although they had fallen well short of their agreed barrelage, it was not the brewer that called in its loan. (Whitbread did, however, have first charge in the list of creditors, so on this rare occasion someone else is in the queue before the bank.)
The man who will be bringing down the gavel on the whole sorry affair on 17 September (the day after the Forteys' silver wedding anniversary) will be John Williams, the managing director of Sidney Phillips, an agent and auctioneer based in Hereford and specialising in pubs. 'I could give you hundreds of examples like Roger and Susan Fortey,' Mr Williams says. 'I've been in the business since 1962, and things are the worst I've ever known them. It seems to me the MMC has served no useful purpose whatsoever. The aim was to free pubs from the tie, to provide a wider choice. But a fairly high percentage of the new free houses have been lent money by the brewers, and now the recession, combined with the collapse in the property market, has driven everything right down. Lord Young made a complete Horlicks of it.' Never mind the Horlicks, back on The Lord Wellington's blackboard it reads: 'Heineken at 99p a pint - WE MUST BE MAD.'
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