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No rush to be open all hours

23 March 2006

Last November's new licensing laws allowing pubs to open for longer were criticised as "confusing and contradictory" by a group of MPs last week. The Office of the Deputy Prime Minister Select Committee accused Tessa Jowell's Department for Culture, Media and Sport (DCMS) of bungling the process and failing the pub industry.

Pubs are certainly not jumping for joy four months after the introduction of the new regime. Despite the frenzy whipped up by the Daily Mail and others, the reality has been muted rather than mutinous and - from the operators' perspective - more about costs than potential profits.

The reasons are twofold: pubs were either refused extensions by local councils, or the operators themselves can't see any financial gain from opening later. Even where local authorities and police have been less draconian in their interpretation of the new act, the spectre of all-night drinking has rarely materialised.

24-hour Retail
Research carried out by the DCMS last November suggests that fewer than one-third of the thousand or so 24-hour licences granted were for pubs, clubs and bars. The vast majority went to retail outlets.

In terms of weekend opening, a sample of 51 local authorities showed that only 64% of pubs and bars had switched to midnight closing, with 33% staying at the old time. That leaves only a tiny minority of outlets opting to close later than midnight. Compare that with the previous situation, where 80% of pubs, bars and clubs closed at 11pm, and it's obvious there hasn't been a huge shift in drinking patterns.

JD Wetherspoon has tended to aim for a 9am-midnight formula in its high-street pubs, with an additional hour until 1am at weekends. But the chain's analysis of the late-night market is even more cautious. "Overall, we haven't seen any increase in alcohol consumption," says finance director Jim Clarke. "I'm not sure people are drinking or spending any more than they did before."

Punch Taverns has seen an average 6.5 hours a week added to opening times across its 7,800-strong leased and tenanted estate, and just three hours in its managed pubs. "It's not had a huge financial impact, but it's really still too early to tell," says customer service director Francis Patton.

A similarly hesitant message comes from Mark McQuater, chairman and chief executive of Barracuda Group. He says: "We've added an extra hour for most of our 180 outlets. It has been marginally beneficial, but I don't think the market has massively increased."

Extended hours have tended to displace trade from one part of the evening to another, says Punch, rather than generating new business. But according to Patton, one effect of midnight extensions has been to make pub management easier, with less of a last-minute rush to the bar.

At the Bar, Entertainment and Dance Association (BEDA), chief executive Jon Collins is hardly surprised that the consumer response to extended opening has been slow. "The message from ministers was not ‘Get out and enjoy the marvellous new café culture' but more like ‘We've given the police extra funding to deal with potential problems'," he says.

According to Collins, the chains themselves are not eager to shoulder the overheads of longer opening hours without the certainty of higher returns. And discussing extended opening at the beginning as well as the end of the day, McQuater says: "You can't keep stretching management at both ends."

Much of the pub operators' caution may also be to do with local resistance to extended opening. As Patton says: "Residents are much more aware of what they can and cannot do with regard to licence extensions." This, he believes, is the flip side of the much more flexible licensing regime.

Compromise "We have had a couple of cases go to appeal," Patton reports. "But in the vast majority of cases we've met with local residents and been able to come to a compromise." This might mean, for instance, agreeing to close a beer garden earlier than the bar, he explains.

Sarah Cotterill, associate solicitor at law firm Tarlo Lyons, says: "Policy documents from authorities such as Westminster interpret the legislation in such a way that they effectively prohibit any kind of extension. On appeal, the licensing committee can object that there are no special circumstances to exempt a pub or bar from the overall policy."

Costs for a committee hearing can be between £4,000 and £8,000, she says, and if residents are involved, that can be much higher.

The mood among the major metropolitan chains is one of caution, with few, if any, planning to spearhead a trend towards drinking through the small hours. Most operators feel the inevitable busy Christmas period and slow January have muddied the statistical waters. "Wait and see" is still the order of the day.

In BEDA's analysis, increased spring and summer trade will allow longer opening hours to come into their own. Further applications for extended licences will follow consumer demand, Collins argues.

But if you believe the chains' predictions, further extensions - and applications - may be slow in materialising, because pubs run the risk of forking out more in lawyers' fees and overheads than they stand to recoup in increased bar takings.

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