Trade can rise to challenges ahead

AS the trade surveys its prospects at the start of another year, it’s hard to imagine that 2011 will amount to anything more than a taxing 12 months. Plus ça change, you might think. It’s an assessment, however, which is based on several, inescapable certainties.

After severe weather wreaked havoc on festive trading, operators woke up in the new year to a succession of brewery price rises and a VAT hike to boot. Further alcohol taxation lies in wait at the next Budget in March. Add these extra costs to the fall-out some fear will be caused by public spending cuts, and the possibility of interest rates going up (fewer jobs and more expensive mortgages equals less consumer spending) and you have an equation resulting in problems for the pub sector.
And that’s before the possibility of another tax – the social responsibility fee, likely to be ushered in this year under the new Alcohol Act – is considered.
Yet the trade in recent years has proved to be resilient in the face of such adversity.

Good operators, of which there are still hundreds, if not thousands, in Scotland, overcame the smoking ban and the transition to the 2005 licensing Act, not just surviving, but trading well too. And many have continued to perform admirably throughout the recession, albeit it has tested their creative mettle to the full.

Maclay Inns, the Alloa-based pub firm, is a case in point. In the January 20 issue we cover the operator’s latest opening, Dram, based in the former Uisge Beatha pub on Glasgow’s Woodlands Road. Despite the difficulties posed by the present trading environment, Maclay had the confidence to invest £500,000 in transforming the premises into something almost unrecognisable from its previous incarnation. And the early indications are that the bold step was worthwhile, with the pub posting its best set of figures since it opened over the festive period. With Maclay soon expected to unveil financial figures showing an improved performance last year, it shows that there is still scope for prosperity in this business, if you do the right things. The factors I mentioned at the top of this article will guarantee that 2011 will be eventful for the trade, but they need not, in my view, signal the end. So the new year message from SLTN is simple: keep striving to raise standards, be open to new ideas and give consumers great reasons to visit your premises.
We look forward to reporting on what you get up to.

The shortfall in lending from banks continues to be one of the most pressing concerns facing operators in the licensed trade. But, as we report on page 26, alternative sources of funding are emerging for businesses in search of working capital. The success of small businesses, including pubs, is vital to the health of the economy, but their viability has been undermined by the banks’ unwillingness to lend on the terms they need, or in some cases at all. The news, therefore, that new opportunities for finance are arising has got to be welcomed, though operators would be advised to examine the small print before entering into any agreements.