Petrol costs cause for pub closures

Rising petrol costs are contributing to rural pub closures and restricting the on-trade’s recovery.

As if the swingeing increases in excise duty and VAT over the past three years were not enough for the on-trade to contend with, a recent survey has shown the extent to which the soaring cost of petrol over the same period has hit licensees and contributed the record numbers of pub closures and bankruptcies since the credit crunch hit three years ago.

The Leisure Wallet Report, a survey published by advisory firm Zolfo Cooper says that 39% of the 3,000 people questioned said that they had cut back on visits to rural pubs as a direct result of rising fuel costs.

A gallon of unleaded petrol now costs £6.17, compared with £4.75 two years ago, according to the AA. That’s a 30% rise to add to the extra costs of alcohol itself.

Those who visit on-trade premises (not necessarily by car) have cut the average number of trips to their local from 5.3 times a month to 4.3 times. And to add to the pain, when they do go out, drinkers are spending less.

On average they now spend £15.08 per visit compared with £17.88 a year ago. Nor will it surprise many that the biggest spending cutback has come in the 35-54 age group as families feel the pinch.

Those gloomy findings are backed up by the latest Mintel survey on household income, which shows that the proportion of family budgets being spent on holidays and alcoholic drinks (why group them together?) has fallen from 12% before the credit crunch hit to 11% now.

Further, the Mintel figures show that consumer spending on alcohol has fallen by 3% since 2006. Spending on soft drinks has risen by 12.7% over the same period.

The Zolfo Cooper survey concludes that “a potent cocktail of falling disposable income, rising costs and increasing taxes on alcohol is causing a severe headache for landlords across the country.”

Of those questioned in its survey, 46% said that they were spending less on drinking outside the home, with 12% spending more – a net fall of 34%. The largest net decline – 42% – was in Wales, while the areas least affected included London and South East, both experiencing 32% net declines, while the North West was hit by a 30% drop.

The findings on the nightclub market are unsurprising. In the space of 12 months, the proportion of people going clubbing has fallen from 14% of the population to 11%, with the core 18-34 age group down from 36% to below 30%. Both spending per head and the number of visits fell.

Less gloomily, Zolfo Cooper found that while the average number of visits to restaurants among respondents has fallen from 2.7 to 2.5 a month, the amount spent on each meal has risen by 2.5% to £16.42, in line with January’s VAT rise. Again, London proved the most resilient region, with spending up 5% to £18.58, while Scotland suffered the biggest drop of 4% to £16.88.