English pubs get set to show smokers the great outdoors

02 March 2006
English pubs get set to show smokers the great outdoors

MPs' decision to ban smoking in all public places in England will almost certainly harm some hospitality businesses, but some operators are seeing the decision as an opportunity to boost business.

There is statistical evidence to prove this from Ireland. Last February a report from the Centre for Economics and Business Research found that bar sales in Ireland fell by 7.3% in the seven months after the smoking ban was introduced, in March 2004. The same study looked at figures for the Scottish ban, which comes into effect later this month, and estimated that "142 average-sized licensed premises may close as a result of decreased trade".

South of the border, the trade has given a very mixed reaction to the ban. The Association of Multiple Licensed Retailers (AMLR) says that some leased estates at the lower end of the market are "bloody terrified". But with the ban now a done deal, most larger chains are keener to hear about opportunities than obstacles.

Attitudes to the timetable are similarly split. While the AMLR realises it cannot turn the clock back on the English legislation, it is keen to see the time tick by as slowly as possible. Chief executive Nick Bish points to Labour's initial manifesto commitment of a ban coming into force in 2008 or even 2009. "If 2008 was good enough at one time, why does it have to be 2007 now?" he asks.

The Department of Health (DoH) insists it is still aiming for a start date in the summer of 2007. A spokeswoman said that, even allowing time for a three-month consultation period, a six-month preparation time for pubs and bars should be ample.

While the DoH may believe "preparation" to mean the careful positioning of ‘No Smoking' stickers, pub chains have other ideas.

Many companies are keen to see the Government's 2007 timetable remain and are talking up the new legislation as a business opportunity.

These businesses are planning to introduce outside smoking areas, covered and (when necessary) heated. They also envisage a more widespread development of gardens and terraces and believe the short lead time will allow them to steal a march on less well-organised and less well-funded competition.

Gung-ho approach Kent brewer Shepherd Neame is typical of the gung-ho approach. Chief executive Jonathan Neame says: "It all depends who has the deepest pockets and the imagination to attract as many smokers as possible and, at the same time, gain non-smoking customers."

Make no mistake, far from shedding business, the likes of Shepherd Neame plan to expand on two fronts. While pub interiors will become havens for a new non-smoking clientele, it predicts new outdoor shelters will provide "pleasant, comfortable smoking areas".

The initial price-tag for these "smoke-easys", says the brewer, will be a total investment of £3m across its estate of 370 South-east pubs. This figure is based on costs of between £5,000 and £10,000 per pub.

Across the 320 tenanted pubs in its estate, Shepherd Neame says it would pay for any fixed structures. Anything less permanent would be down to the tenant, Neame explains.

With its larger holding of 1,800 tenanted and leased properties, the Union Pub Company (UPC) is potentially looking at a much greater total outlay. According to managing director Stephen Oliver, this could be up to £20,000 per pub, or £25,000 for managed houses owned by parent company Wolverhampton & Dudley Breweries. For tenants, the sum would be a loan rather than a blank cheque, to be returned as rent over five years, he explains.

UPC sees this investment going into pergolas, awnings, large umbrellas and generally more attractive outside areas. The company is already talking to three contractors to supply tailored solutions, and is running trials at six Burton-upon-Trent pubs. Oliver says he is keen to discourage half-baked DIY schemes from tenants and the trial pubs will also act as a showcase for other landlords.

Landlocked Of course, there are pubs, particularly in city centres, which have no outside space to grow into. "For a landlocked wet-led boozer, we may have to invest ourselves," Oliver concedes. There may be just 10 or 15 in the entire estate, he says, and in extreme circumstances "their future would be questionable".

Neame argues that city-centre drinkers, already used to lighting up outside the office, would simply transfer that behaviour to the pub. But he agrees that for a few locations the legislation may mean a 25% or even 30% drop in turnover. Even so, he foresees no need to increase the chain's standard yearly churn of seven to 10 pubs.

Timescales and cost are only two of the considerations for pub operators. The industry will also be looking for consistent (and flexible) enforcement.

Much, too, will depend on local authorities' speed in processing planning requests and changes to licences. Those itching to add a thatched gazebo to their listed property may yet see those carefully-laid plans go up in smoke.

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