Why not pick up a pub for Valentine’s Day?

Rarely does the silly season arrive as early as February, but in a year that seems likely to set all sorts of negative records, one will be the first sighting of promotional fantasy.

This is one of the lowest points in the hospitality industry’s calendar as people stay at home recovering from the enormity of their Christmas credit card bills and avoiding the cold and wet. Indeed, as pizza delivery companies celebrate booming business, restaurants are suffering. They were harder hit in the final quarter of last year than any other part of the UK leisure and hospitality sector – 141 of them collapsed into insolvency between October and the New Year, according to PWC. That represented 45% of the industry’s insolvencies in that period.

Nor are conditions getting any easier. In a gimmick to create cash flow, one London restaurant, Peter Ilic’s Little Bay in Farringdon, has abandoned issuing bills for February and instead is inviting customers to pay what they think the meal was worth. In addition, one of the country’s most successful upmarket restaurateurs confided that he was pleased because his takings were only 5% down in January compared with what he estimated to be a general 40% downturn. The bad news for his wine suppliers is that his takings had fallen because customers were trading down the drinks list.

The one ray of sunshine that can be used to lift the February gloom is Valentine’s Day, so one can hardly blame pub auctioneer and estate agent Fleurets for trying to jump on the bandwagon, asking: "Instead of red roses this Valentines, why not purchase the Rose & Crown instead, at a rock bottom price?" The trouble is that about 40 pubs are closing every week and Fleurets alone has almost 700 houses on its books. Last week the valuer even trumpeted that the average sale price for a freehold pub being sold by a brewer had fallen to less than £200,000, a level last achieved in 2004 – and remember, the best of those houses (whose prices are relatively stable) are sold between brewers and pubcos without resort to a middleman.

Buying a boozer for your lover could trigger the very opposite of the desired reaction. It’s cheaper and safer to stick to any combination of red roses, Champagne, chocolates and a romantic dinner.

Finance on Friday, 06.02.09