Following the bad publicity the Public House Sector has attracted over the last few years, and with so many pub closures following the credit crunch, isn’t it about time things improved for this sector?

Whilst there has been a reduction in consumer spending and less frequent customer visits to pubs, the average spend when a customer does visit has increased. This is due, in part, to food sales. It seems customers are viewing visits to pubs as treats rather than the regular occurance it used to be.

There are a number of other factors  affecting this sector including the smoking ban, particularly in older town centre pubs . As well as a rise in business rates and, for some, Sky subscriptions. There has also been the price competition over recent years with supermarket promotions and a rise in discount shops offering sales in some cases at cost price.

It seems that the future is going to be a very tough time for the older style ‘boozers’ and only the best community orientated businesses run by entreprenuerial owners will continue to prosper.

With food sales being the main saviour for businesses with some companies forecasting a growth of 3.5% in eating out over the next five years, there is no reason why a food friendly pub, cannot  return to a growth pattern. Particularly if a economic recovery occurs.

In terms of valuations the multiples of profit has fallen to 4 to 6X yearly profits against 8 to 10X profits which was achieved before the credit crunch. These are also related to freehold pubs rather than leasehold pubs where it is hard to achieve any premium on the lease.