Is the pub sector really in trouble? Hospitality accountants weigh in
According to hospitality accountants, despite the latest forecast that warned of a negative revenue growth for the pubs, bars and nightclubs sector; pokie machines in Tamworth still reported over $32 million of profits in 2018. The report shows that the profit in pokie machines is increasing as people spend more through the machines. The profit increased by $2 million from 2017 despite the machines and licensed premises being fewer in number.
In 2018, there were 742 gaming machines in 38 pubs and clubs in Tamworth, which meant each machine drew a profit of $43,422.82 on average. Tamworth’s pokies paid over $5 million in tax last year. Poker machine gamblers in New South Wales have lost a record amount of $18.7 million per day in 2018, amassed on 93,165 poker machines. Pubs and clubs are great venues to socialize at. There was concern that gambling had almost reached a saturation point in the country with cross-platform advertising and apps that make gambling easier.
This year, small bars and pubs with premium drink and food offerings were expected to perform well while pubs that depend on pokies revenue were projected to come under pressure from tightening regulations. Owners are urged to let other revenue streams in to offset any impact on the business. It would be prudent to speak with hospitality accountants and make sure business financials are healthy. It would be wise to control and reduce debt to better handle the expected shock to the sector. Funding costs would likely continue to increase for pubs and availability of credit likely tighter. Pub real estate values have soared as well, prompting debt level and tightened spending concerns.
However, investors remain optimistic, saying the current market conditions are challenging but also cyclical, presenting a great buying opportunity. The environment is said to be stable and collaborative with positive initiatives that may even enhance the industry. Pubs sold to the Woolworths-controlled ALH Group and Cole’s Liquorland at yields below 6 per cent in 2018, reflect confidence in the market as well.
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