Beware the perils of the pub trade

07 August 2008 by
Beware the perils of the pub trade

Aspiring publicans have been warned about the "immense risk" of running a pub in the current economic climate, after three pub operators were forced to call time on their businesses in the space of a week.

Liverpool-based brewer and pub operator Cains is trying to thrash out a rescue plan with its bankers amid fears that the 100-strong pub estate could be wound up at the High Court on 12 August, with 900 jobs in jeopardy.

Cains, which as recently as April said it was confident it could achieve profitable growth after its reverse takeover of Honeycombe Leisure last year, lost the support of its backers last week after losses spiralled to £4.5m and it admitted that it owed HM Revenue & Customs outstanding duty.

Struggling Kent-based Bar Group, owner of the Bok Bar chain, applied for protection from its creditors last week by way of a Company Voluntary Agreement (CVA). It came hard on the heels of the collapse of bar chain Bar Sport, which went into administration early last week.

Already this year Massive Pub Company, Sports Café and Soho Clubs and Bars have collapsed, and London bar and restaurant operator Food & Drink Group is believed to be looking to agree a sale price with two interested parties as part of a prepackaged administration.

Devon pub company Heavitree Brewery last Thursday (31 July) extended its strategic review period and warned about its half-year performance with a loss of £130,000 forecast compared with a profit of £784,000 in the same period a year ago.

Michael Turner, chairman of Fuller, Smith & Turner and the British Beer & Pub Association, said: "I've seen some serious downturns but I've never seen the same collection of negative effects in the industry all happening at the same time."

David Hunter, consultant at pub consultancy the Bowden Group, said the current troubles faced by the pub industry should serve as a warning to those considering entering it.

"What worries me is I deal with people who are really in the pooh all the time. People are attracted to the pub trade because they want to be their own boss but they have no idea how much work it is. People who want to take on a pub should be aware that the risks are immense."


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By Christopher Walton

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