Growing divide in turnover for rural and urban pubs

With profits down by 30%, thousands of publicans have been forced to reduce hours and cut costs to survive, with a growing number closing their doors.

Rural pubs are suffering most with emigration, changing social habits and the deepening recession threatening the future of many publicans.

AIB’s sectoral report on the licensed premises has found a growing divide between urban and rural areas, with the majority of pubs in Dublin saying they plan to invest and expand in the next three years.

However, the decline in the fortunes of rural pubs has lead the Vintners Federation of Ireland to predict that many will struggle to survive.

The survey found there has been an overall 34% drop in on-trade sales in the last five years, with half of pubs reporting an average 15% fall in turnover.

In Q2, 2013 the volume of bar sales stood at just 64% of their level in 2005. The value of bar sales (when inflation is included) fared better, at 72% of their 2005 level by mid-2013.

Amárach Research, on behalf of AIB, conducted a telephone survey of 200 publicans throughout Ireland in July 2013. Of the 200 pubs surveyed, 75 were in Dublin, 25 in urban areas outside Dublin, and the remaining 100 were in rural areas.

It found that one in four pubs have reduced their weekday opening hours (Monday-Thursday) in the last year, rising to one in three in rural locations. One in six pubs had been forced to reduce their weekend opening hours, considered to be by far the most busy.

The majority of pubs in the survey outside Dublin had a turnover of less than €635,000 while most Dublin pubs had a turnover between €635,000 and more than €1.27m.

The survey found publicans are facing financial challenges on a number of fronts.

“Though pub-goers are still keen to go to the pub, they are seen to be ‘managing’ their time and money in ways designed to keep within budgets and to complement spending in pubs with spending in off-licences as well,” the survey’s authors said.

Furthermore, they said a large percentage of pub owners are faced with a significant debt burden.

“Their core business was doing well during the boom years which enabled them to borrow for other purposes and now they find themselves financially stranded in the recession,” the report said. “The bottom line is that some publicans may need to get out of the business as the business is not going to come back to viability and profitability for them.”

Donal O’Keeffe, chief executive of the Licensed Vintners Association, said the pub sector in Ireland is being rationalised. “There is simply not enough consumer demand to support the 7,400 pubs plus another 1,000 hotels nationally.”

In spite of that, almost half of the pubs surveyed (46%) said they are planning to improve or expand their business in the next three years. That jumped to 63% of Dublin pubs.

“Many are investing in momentum, with 65% of those who saw turnover rise last year planning to invest in the next three years, compared to just 33% of those who saw turnover fall,” the report said.