LONDON/DUBLIN Nov 17 After years of waiting on
the sidelines, Britain's major pub chains have finally spotted
an opening in Ireland, hoping tumbling property prices will give
them a chance to expand into a neighbouring market they never
managed to crack.
At the height of a property boom in 2007 one in six Dublin
pubs that changed hands was sold for at least 14 million euros,
with almost half sold for over 6 million - far too pricey for
big players in need of as many as 12 sites to make a market
Six years on, after a burst property bubble and an
international bailout, the typical Dublin pub now changes hands
for a mere 800,000 euros. In that time, Irish pub revenues
declined by a third and more than 1,000 mostly family-run
establishments closed down.
For British chains, that means opportunity at last.
According to the central bank, the average Irish pub is now
carrying 270,000 euros in debt, meaning big chain entrants can
exploit their financial advantage to invest in refurbishment and
be more competitive on price.
The first big British pub firm to announce Irish plans is JD
Wetherspoon, owner of more than 880 UK pubs. It last
abandoned plans to enter Ireland almost 10 years ago because of
property prices, but has now agreed to buy its first two Irish
sites, both in suburban south Dublin. It aims to open 30 around
"It'll probably take five to 10 years to get established,"
Wetherspoon chairman and founder Tim Martin told Reuters. "We
think we can make a go of it."
Wetherspoon is not the only firm coming. Charlie Chawke, one
of Ireland's best-known publicans, told Reuters he had been
approached by an intermediary on behalf of Britain's Greene King
, which has 2,300 pubs, restaurants and hotels. Greene
King declined to comment on its Irish plans.
A source at another of Britain's leading pub chains told
Reuters it was also keeping tabs on Ireland.
And it's not just British chains spotting an opening. David
Kelly, Dublin-born owner of the Ri Ra chain of Irish pubs in the
United States, has opened his first pub in Dublin.
Despite the recent hard years, pubs remain an important part
of Irish culture. The Irish drink an annual 11.6 litres of
alcohol per capita, among the most in the OECD and more than the
The downturn saw drinkers diverted from pubs to cheaper
off-license shops and supermarkets, which now account for 60
percent of sales. But drinks manufacturers see the tide turning
back. Magner's cider maker C&C saw sales in bars outperform
off-licences for the first time in seven years.
"Having been bearish for two or three years on Ireland in
terms of the economic cycle, we're bullish. The Irish consumer
is certainly feeling a lot better," C&C's chief
executive Stephen Glancey told Reuters last month.
After imposing a smoking ban that publicans say hurt their
business, Dublin is now set to bring in minimum alcohol prices,
which should prod some drinkers back to the pub by reducing the
price advantage of buying beer in the shops.
One gap in the market where British operators may have an
advantage is pub grub. A still relatively underdeveloped concept
in Ireland, food sales are now a major growth area for British
pubs as cost-conscious consumers eye cheaper nights out, and are
made more attractive in Ireland because of its 9 percent VAT
rate - much less than the 20 percent pubs pay in Britain.
JD Wetherspoon anticipates food will make up 50-60 percent
of its turnover in Ireland, compared to 30 percent that
Ireland's Licensed Vintners Association says is the average for
an Irish pub. Some 40 percent of Dublin pubs still do not offer
a lunchtime menu at all.
But Ireland has its challenges, including fiercely loyal
customers for independent pubs, a national identity famously
uneasy about its bigger neighbour, and an obsession with a
certain local black beer.
"The Guinness will be (rubbish) and they'll probably show
cricket matches!" lamented one of 2,397 fans on a "Feck off
Wetherspoon" Facebook page. Another wrote: "We are becoming more
English than the English themselves. Protect our own."
Wetherspoon's Martin acknowledged that "Ireland is a hard
nut to crack," adding that the firm recognised it would take
time to win over Irish customers.
"The way it's been portrayed is that we think we can just
get off the boat and make a few million euros and ship them back
to Britain, and it's not going to be like that."
For a chain looking to build a portfolio, it is still hard
to find prime Dublin locations for sale. One auctioneer said
demand for the few pubs on offer in the capital is "phenomenal".
And elsewhere, consumer spending is still held back by
unemployment above 13 percent. The LVA still predicts more pub
closures, arguing that Dublin aside, a country of 4.6 million
cannot support its 7,400 pubs - one for every 620 people.
Chawke, who paid the highest price ever for an Irish pub,
buying the Old Orchard Inn in the scenic south Dublin suburb of
Rathfarnham for 22 million in 2005, says he is not worried about
competing with the big British chains.
"They're very welcome to come in and try their hand at what
they're good at. We'll see how they get on," he said. "People
have come and gone before."