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Smoking ban fails to dent business
by Alan Gordon, Partner, DM Hall
Scaremongers warned that Scotland's pub trade faced disaster with the introduction of the smoking ban but, far from losing business, most pubs are now doing better than ever. Alan Gordon sheds some light on the current robust market for Scottish pub properties…
Even before the ban was imposed, the property market gave the pub sector a firm vote of confidence, with no impact at all being seen on pub values. Despite the concerns, prices for pub properties continued to rise in the lead up to the ban, there was no slow down in demand and there was still a shortage of supply. Pub owners remained confident in the profitability of their businesses.
Now, with the ban in place, it's clear that their confidence was not misplaced, and many Scottish pub operators' businesses are thriving under the new regulations.
One hotel-owner who also has half a dozen pubs, said the ban had been welcomed enthusiastically by non-smokers, while the smokers had had no choice but to accept it. He said there had been no change in his weekly sales, and in one of his properties - a traditional community pub in a Glasgow housing estate with no beer garden or outside area for smokers - turnover was actually up.
Another operator, with four pubs, said he had analysed his turnover figures and found that while Monday to Friday daytime trade was markedly down, the loss in takings had been more than offset by increased weekend and evening trade. He attributed the increase to a combination of people who wouldn't previously have gone to a pub at all because of the smoking, and those who did go to pubs before but were now staying longer as they found it a more comfortable environment.
Pub owners need to recognise that they have a different kind of business now and they should tailor their management, their marketing and the services they offer to a new clientele. There are clear implications for staffing levels and entertainment needs, with fewer staff needed during week days.
Further evidence of how the industry has taken the smoking ban in its stride came from comments by the Managing Director of a Scottish pub company which leases out several dozen properties. He said that, in the lead up to the ban, they had felt genuine concern about the possible impact, and had gone so far as to draw up a range of contingency plans to deal with falling sales and profits. Not one of those measures has had to be implemented, and none of his tenants has complained of any drop in trade.
Obviously there will be one or two businesses which, for one reason or another, are taking a hit from the ban, but even in the vulnerable market of rural village pubs, I have not heard of significant problems.
Now that the predictions of doom and gloom have proved unfounded, and with pubs showing they are continuing to enjoy strong trade, the market in pub properties looks set to remain bouyant in the foreseeable future. There has been no drop in demand, the market remains robust, and the lenders who underpin the market have demonstrated their ongoing commitment to provide funding. However, it is important that pub operators take note of the changes in customer demand that have followed the smoking ban, and modify their business operations accordingly.
This article has been edited from the original. To view the feature in full, please see Catering in Scotland magazine. To join our database, go to Media Pack on this website and click on Subscribe.
