Project Overview
The Barge Inn Honey Street is an internationally reknowned historic canalside public house and camping site.
It is also hailed as the 'official site for the discerning Crop Circle Investigator' and the hamlet that is called 'Honey Street' is a product of the Kennet and Avon Canal. The pub has been and remains an integral part of the community whether they are locals, canal communities or the international crop circle communities.
The pub is up for sale and like many pubs in the Unitied Kingdom is at risk of closure. The Barge Inn Community Project is all about saving, retaining and developing the Barge Inn as a community enterprise.
Project Progress
A community group has been formed and public meetings held. This has given the endorsement to progress with a project to test whether it was possible for the community to own the business.
Finance was obtained from Kennet District Council to cover the costs of a Feasibility Study and eventually Facilitating People Ltd was briefed to undertake the work. Pinders, specialist commercial valuers were commissioned by Facilitating People Ltd to value the business as a leasehold purchase..
The general market in respect of the licence and catering trade is slack and it is assumed that 2009 and onwards may be tougher.
There are opportunities for additional complimentary initiatives that would enhance the destination and increase the numbers of spending visitors. These for the present are not included as there is a wish to develop the core business first.
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Subject to the price negotiated from the lessees it would be possible to set up a social enterprise to purchase the lease and manage the Barge Inn. The funding could be by a share or bond offer. This method would raise the capital but allow repayment should insufficient monies be raised.
Market Overview
The present economic climate and its impacts on the industry have yet to be felt and understood. It is likely that there will be a reduction in restaurant and pub visits. Punch Taverns who own the Barge Inn announced (The Times 5th Jan 2009) that it is to offer 500 of its worst performing pubs lessees the opportunity to buy the freehold. Much of this has now happened with the raising of £160million .
The British Beer and Pub Association say that 39 pubs close in Britain each week at present a rate some 20 times higher than three years ago. Last year some 1973 pubs closed and in 2007 some 1409 closed. This equates to some 44,000 jobs being lost in recent years ( Daily Telegraph 19th Jan 2009) and there is a risk to 60,000 more
Even in 2007 the view was being expressed that it was tough to build a successful food and beverage business (report Deloltte 2007) Consumers are getting more demanding and getting more as well as more for less. Competition is getting tougher, downward pressures on process and margins continues whilst the distribution and input costs were rising. The overall market is expected to be very tough in 2009 with more closures, pub company disposals
Tougher regulation in respect of a variety of things particularly in the curbing of binge drinking may result in a mandatory code which will include a ban on speed drinking promotions, women only nights and new compulsory qualifications for bar staff. The British Beer and Pub Association estimate these changes that are part of the Police and Crime Bill will cost pubs more than £300 million. These additional costs to small marginally profitable pubs it is estimated could be fatal.
Reports from Morgan Stanley September 2008 promote a negative view that investers avoid leased/ tenanted pubs with the following major risks identified as the reason for this advise.
Pubs are over rented/ tie beer prices are damaging/ regulation /under maintained pubs/balance sheet risks.( This seems to be the case in respect of the Barge)
Corporate responsibility and climate change has now become a consumer priority as can be seen from the many more published green business strategies being implemented.
Healthy lifestyles and public health as issues to address in the industry are growing in importance and should now be key influences to brand relevance.
In 2007 diners across the UK stated that they prefer health smoke free environments. Some 11% sited the need for healthy options with finally reputation, variety and price being the third priority of importance.
The population is aging and by 2012 it is estimated that some 23% will be over 60(an increase of 14.5% on 2004 figures) Many pensioners in the future will be active, educated, health conscious and demanding. It is likely too that they will be more affluent than previous older citizens although the implications of the present economic climate have yet to kick in.
In 2007 an average of 27% of weekly food budgets went on eating out within restaurants and pubs.
In summary key issues identified for the food and beverage industry nationally–
- Changing spending patterns as a direct outcome of the economic climate
- Health, nutrition and corporate responsibility
- Tougher regulation
- Climate change issues
- Food miles verses sustainable development
Complimentary Project Initiatives
As a community project there has been some discussion on complementary initiatives that will make up the whole package. The lease of the Barge remains the core of the project but the initiatives will add to revenues and would widen the community support and funding opportunities.
The following list is the items identified by the project group
- Caravan and Camping Site Upgrade site with hard standing and hook ups and construct Laundrette.
- Introduce a village shop and post office
- Bed and Breakfast
- Yurts and Tepee hire
- Community Bus
- Wedding Receptions
- Activity Holidays
- Organic Garden
- Drama Workshops
- Music Workshops
- Crafts
- Moorings
- Rowing boat hire
These items will form part of the future business planning activities should the opportunity progress.
Benefits from the Project
Tourism
The tourism multiplier effect – Tourism not only creates jobs in the tertiary sector, it also encourages growth in the primary and secondary sectors of the industry. This multiplier effect can be measured and will show simply how many times money spent by a tourist circulates through the local economy.
Should the pub close there will be a negative effect to the current multiplier. The business improving will by contrast improve the multiplier.
Employment
Should the pub close this will reduce the employment directly and indirectly in the area.
Should the project progress with additional offers this will grow FTE’s in the area and increased local spend from salaries earned in the area.
Economic Spend
The average spend in the countryside by visitors is over £13.00 per visit. Visits are determined by destinations and the location for spending and it can be assumed the Barge, the Canal and the crop circle landscapes are an attractive destination.
Local Capacity
The principle of growing local capacity is widely acknowledged as a positive factor in gaining flourishing sustainable communities . This locally led project can be the ‘glue’ that holds together the people of the area whilst improving their quality of life.
Feasibility Assessment
In undertaking the feasibility assessment the following have been used as the key components.
- Community engagement- Is the project meeting community aspirations and ambitions
- Project team- Has the team a track record and competencies to lead and deliver.
- Social objectives – can the project gain interest and enthusiasm to raise financial support
- Viable business model – is the model capable of generating sufficient to pay a return and is this affordable, balanced and realistic and therefore achievable.
- Risks - Should the project progress have all risks been considered and can they be managed.
The ‘Communities of Interest’ are wide reaching and can be considered international through the canal and crop circles links The resident profile of the area is prosperous and given the project engagement is not within a given geographic area.
To date there has only been two local public meetings which have shown local endorsement but there will be a need to communicate with a wider public.
However ‘the place’ that is the Barge Inn is internationally renowned because of historic connections with the Kennet and Avon Canal and the Crop Circles. This wide community of interest is a major strength.
Project Team The team is in place with enthusiasm and skills to develop the plan and project. There will be the need to grow those skills as well as ‘purchase in’ further skills as the project advances.
With the addition of development partners (PACT, Community First, Wiltshire County etc) the project team can deliver.
The social objectives of the concept of ‘the pub is the hub’ is well proven and tested. The target community grouping is identified and with little risk can be engaged
High levels of communication will be required to sell the benefits of the project to the full community grouping. Additional project support should be draw from the various contacts.
The draft Business Plan identifies the business to be sustainable.
There is the opportunity to offer a wide range of amounts people may wish to invest. This is possible because of the large and diverse communities of interest. The finances can be spread across a variety of sources – community shares, loans, grants.
The ideal model for the organisation would be a Industrial and Provident Society as this gives the structure and governance and the ability to raise capital from a community share or bond offer. This can be done in a way that the funds are raised in advance of the purchase so testing the community commitment.
The timescales will be determined by the ease of the funding applications and of course the negotiations with the lessees and landlords.
Project actions
Subject to the price negotiated from the lessees it would be possible to set up a social enterprise to purchase the lease and manage the Barge Inn. The funding will be by a share or bond offer