Last month was all about beer gardens and camping, but since it’s started piddling down we are are now having a debate about reducing social distancing.  Either way, I can see neither working very well.

The bottom line with pubs is that they have been struggling for years, since the time when licensing hours were changed, smoking was banned and most importantly (at the same time) supermarkets could now sell stacks of beer, wine and booze really cheaply.  They have become superb loss leaders that are great at getting consumers through the door.

During lockdown, one area of growth has been our bottle bank.  We don’t use it at the moment (obviously) but it has become a very busy bee.  There is plenty of drinking going on.

All this ‘how to deal with Covid-19 and save the pubs’ debate kind of miss the point.  Pubs were struggling to make the numbers work anyway, which means there is not a lot of slack in the system to deal with a virus problem.  The bottom line is that most bars make their money on Friday and Saturday night and waste their money during the rest of the week.  Overheads are high, takings amount to a few quid  per a drink from which VAT, the product, lots of staff costs, rates, loans and huge energy bills need to be paid.  See a pub with a sprinkling of people on a midweek night and you see the problem pubs face.  You need to sell a lot of pints to pay those bills.

As with all businesses the aim is to get the income to overtake the overheads and costs and pubs that do survive or thrive can do this.  They are busy enough.  Mathematically it means the last percentiles of customers are the profitable ones and the overwhelming number of customers just pay towards the bills.  To make this harder, pubs sell drinks that are expensive compared to a supermarket / drinking at home.  As a pub, often the cheapest place for us to buy booze is a supermarket – and then we start adding on our margin so we are comparatively expensive.  What we actually offer is a place to experience, enjoy each other and socialise.  Selling booze helps lubricates our tongues and makes life just a little better and cheers us up.

None of this is particularly easy at the moment.  It is obviously in demand, especially within our ideological spirits as the reality of the situation is that we all steadily going a bit stir crazy with Covid Cabin Fever.  A pub that is to survive on a diet of safe social distancing is the ultimate antipathy of what a pub offers.  Best you can get is to stay at home and enjoy a bottle there – so that is what people are doing. 

If government really wanted to help, there are a few more sensible ideas I could float:

  1. Scrap VAT on food and booze but only in licensed premises. e. financially incentivise people to socially drink and licensees to manage it.  Much more socially responsible that facilitating boozy loner at home drinking with a side of alcohol induced domestic violence.  It won’t happen because supermarkets are far too powerful, and people want cheap.  Regardless, a socially responsible government would do it but also we have governments funded by big companies (like supermarkets!) or an alternative typified by the Banshees who obsess over historical figures from a society a few hundreds of years old. 
  2. Similarly, government could scrap duty on booze served in pubs and restaurants. Same argument, same opposition.  Probably blamed on the EU for the rest of the year at least.  Who knows, except tax is the one thing the government do control.
  3. Deal with the VAT threshold problem by which I mean: it can’t be right that a business who takes £86000 a year pays out 20% of this in VAT and another who takes £84000 doesn’t pay anything. It is the greatest incentive to stay small there ever was.  It is grossly unfair for all businesses whose natural capacity of sales prevents it growing and competing with much bigger businesses with multiple premises or a limitless marketplace.  Another tax system that is anti-competitive and protects big business by hindering the entrepreneurial spirit and individualism of the smaller business.

If the country, it’s voters and it’s government is really worried about the demise of the pub and paying for all the unemployed the sector collapse will create then it could just change the tax system – it would be cheaper.  It could make up for the losses by increasing tax on at home alcohol sold from supermarkets too.

Obviously, it will never happen, so roll on the pointless reduce social distancing debate.  The only thing guaranteed not to gain from this is a pub.  In fact, those pubs who have those nasty ‘forced to be open clauses will go bust even faster.

Of course, the only real cure is a cure.


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