Over 1,000 pubs have closed since 2007 – mostly due to reasons beyond the control of the publicans e.g. increases in VAT and excise duties, major banking problems, increases in consumption of alcohol at home, cheaper supermarket prices, and a general decrease in customer spending due to the poor performance of the economy.
Pubs are a vital part of our economy with figures showing that an average pub employs six people while approximately 52,000 people in total are employed in the on-licence industry. They also indirectly create work for in the construction industry spending an average of €23,000 on refurbishment per year. The majority of pubs also support local suppliers, local clubs and sponsor local events.
So what is in control of the publicans themselves? How can you ensure your pub not only survives but thrives going forward?
8 effective ways to become more cost-efficient…
1. Negotiate rates
In the years of the boom, commercial rates rocketed and with pubs performing at a satisfactory level, generally few objections were made. With decreases in turnover and profits in recent years, now is the time to talk to the rates office, arrange a meeting and negotiate a reduction in the commercial rates.
Many publicans are going beyond their overdrafts, subsequently incurring additional increasing bank charges, referral fees and surcharges that could be avoided by negotiating and increased overdraft facility.
3. ‘Ask’ suppliers
If you don’t ask – you won’t get!!!
As you implement some of the above and your turnover begins to increase, why not get on to your suppliers. You have been loyal customers of them and I know from dealing with publicans that if you go out of your way to ask what they can give you in return for your custom, more times than not, you will be surprised at the outcome.
Whether it is a better rate on supplies, discounts, additional ‘free’ stock with orders or even a cash donation, sometimes provided to help with refurbishments.
4. Cutbacks…tough times call for tough measures
The tradition of free drinks and food for staff can become a heavy burden on publicans in hard times. Staff entertainment is being cut in most industries – although it is important to keep happy staff and it is a nice perk of the job. it may be time to weigh up the cost versus the benefits of such perks
Sometimes less is more – and cutting back may actually improve the staff attitude as a whole (in the medium and long term).
Every little counts!!
Many publicans import goods and services for example, Sky Sports subscriptions, from outside Ireland. Irish VAT cannot be reclaimed on these services so it is of utmost importance that you specifically quote your Irish VAT number to suppliers outside Ireland. The supplier can then provide goods/services without charging VAT.
6. Manage cash flow and stock
Complete regular stock-takes or tighten controls on stock orders and rotation.
Having too much stock can lead to not only wastage, but also can put pressure on cash flow and again leads to high unnecessary bank charges.
On the other hand having too little stock can lead to customer dissatisfaction as well as increasing costs of emergency stock.
7. Keep up-to-date books and records
Regular and timely and accurate supplier balance listings will also help mange cash flow. Use efficient and professional people that can guarantee you timely, accurate and up to date information on your financial and accounting system. This will help you chose who requires urgent payment and who can be paid at a later date.
Don’t just pay ‘whoever shouts the loudest’
Again, good management of this aspect will help build better relationships with suppliers and lead to better deals in the longer term.
8. Timely returns to Revenue Commissioners and Companies Office
Related to the previous point, this can save you a lot of unnecessary hassle, time and money. Late submissions of VAT, PAYE, Income Tax and Corporation Tax and company’s annual returns can lead to significant penalties, surcharges, and interest as well as restricting the use of any available losses.
Don’t let your accountant leave it on the long finger – Returns should be at minimum, filed on time. If payments cannot be made at the same time, at least surcharges are avoided and your accountant and tax adviser should be able to assist you with payment arrangements – minimising any potential costs.
Tax clearance is required for your licence renewal and therefore this is a must do!
It also minimises the risk of Revenue audits, which can be costly, worrying and time-consuming.
And 4 tips that may seems quite obvious but not always followed …
1. Maintain and grow your customer base by being positive
The last thing a customer wants to do is walk into a pub and feel like he/she is a burden on the bar staff. Smile and greet! If owners, managers and staff are in good form, so will the customer – customers want to feel welcome and will be more likely to stay longer, re visit and recommend a pub with friendly and welcoming staff.
That’s not to say they are always right (especially after a few drinks) but for a customer point of view – knowing your custom is appreciated is highly important and likely to lead to further business.
This might seem obvious but improve it and the positive effect will be very noticeable.
2. Ensure your product is top rate!
Aim to have customers leave saying ‘they do a good pint’
The most important thing in the success of a business is to satisfy the needs of customers – The extent to meeting and exceeding expectations will lead to satisfying the owner – i.e. Maximising Profit
Having initially welcoming your customer, do your utmost to ensure your drinks and/or food is of top quality.
Regularly check temperatures of beers, stout, ales and lagers to ensure at appropriate levels. Ensure quality of drinks by having a clean bar and lounge, taps, glasses, and tables (encourage the use of beer mats)
3. Manage your staff effectively
Usually this is one of the largest costs to publicans and therefore needs excellent management.
- Staff numbers and hours allocated should be matched with levels of turnover.
- Use of junior staff should be integrated with senior staff in order to save on wage bills.
- Regular changes in staff roles and responsibilities will deter staff from misappropriation of funds and/or stock.
4. Health and Safety
Simply put, make sure your premises is up to standard and comply with regulations: health and safety, fire etc.
Poor standards will ruin your reputation and your business and can cost you your livelihood.