Pub sector begins to show signs of stabilisation after decades of decline

Pub sector begins to show signs of stabilisation after decades of decline

Thursday, August 30, 2018 Posted by Joseph Streeter
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The UK pub sector, long considered the backbone of the British gaming machine business, appears to be in a more balanced state following decades of sustained contraction. From nearly 61,000 pubs in 2000, the market declined to circa 43,000 in 2017 but has since seen some welcome stabilisation with the rate of closures slowing to a near standstill.

The latest assessment of the market comes from property firm Christie & Co which suggested in its half-year report that the market is now in a better place in spite of 18 months of cost pressures.

It noted: “Following decades of contraction, pub supply is now broadly balanced with good demand, with the rate of pub closures having stabilised to nearly nil, despite negative publicity to the contrary. Christie & Co has continued to see confidence manifest in investment, as established operators from industry stalwarts, such as Marston’s, McMullen & Sons and Everards continue to build new pubs. With operational pressures having increased, it is these purpose-built, efficient-to-operate units that many of the bigger players consider to be the future of the sector.”

It added: “At the other end of the market, the private free house segment has continued to bounce back, with some return in lifestyle buyers. Growth aspirations amongst the most successful of these smaller operators has seen the number of multiple operators grow, many of whom continue to drive demand from a transactional perspective through their thirst for expansion. Private equity and investor interest remains strong, with those familiar with the sector able to differentiate between the well-publicised challenges faced by the restaurant sector and a vastly more structurally resilient pub sector.

Christie & Co’s interpretation of market conditions may be a case of too little, too late for the UK’s beleaguered machine industry. The damaging effect of those 18,000 pub closures since the turn of the millenium has been felt particularly strongly by gaming machine manufacturers and operators, with production of Category C gaming machines falling dramatically year-on-year.

In its heyday, a thriving UK machine manufacturing sector churned out circa 50,000 units every year. Currently, and with lower demand supporting fewer factories, a figure of 10,000 per year looks ambitious.

The fall in pub locations for gaming machines has also been exacerbated by what is evidently a declining appetite for ‘amusement with prize’ entertainment. At the last count, drawing figures from industry data specialist CLMS, weekly takes from fruit machines had plummeted by an estimated £600m since 2007. As an average, that equates to 25 per cent less in the cashbox every week.

Totally Gaming says: There has been a vast amount of negative publicity around pub closures over the last decade or so, some of it justified, some not. There is an argument to suggest we had simply too many pubs and that there was a need for a re-balancing of the numbers. But essentially, the world has changed. The British boozer used to be the go-to location for a drink and some light gaming entertainment, two pastimes that can now be enjoyed without opening your front door. The size of the pub market may have reached a sustainable level, with the brakes put on mass closures, but the challenge for the gaming industry to innovate, and engage and entertain today’s pub goers appears bigger than ever. Failure to do so will see yet more crying into empty cashboxes.



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