Lidl is launching its first-ever UK pub this summer in Northern Ireland after a six-year legal wrangle. While a great marketing ploy for the supermarket right across the UK, all isn’t as it seems.
As the glasses are polished and the drinks – including some well-known names from the supermarket’s shelves – are lined up behind the bar; it’s worth noting that the opening of Lidl’s first ever pub has come after years of legal shenanigans.
The pub is actually being opened not because the supermarket is diversifying its options and launching as an alternative to traditional pubs, but because Northern Ireland has very specific licensing laws, and this was the only way it could sell alcohol on this site.
Quirky laws
The Lidl stunt has seen the spotlight put on one specific rule in particular, and this is that if you want to open either a pub or an off-license in Northern Ireland, the license has to come from an existing business. This business “surrenders” its licence to your venture, and this is how you can then sell alcohol.
As Timeout reports, it has been a six-year battle for the supermarket chain, in which time it had to prove that the existing businesses in the area were not sufficient to meet the demands of the local population.
This “inadequacy test” was only passed when two bars near the proposed site in Dundonald closed their doors. This meant that Lidl could take a surrendered license and therefore start selling alcohol.
It also won a High Court hearing, launched by a local off-license owner, in which the supermarket had been accused of abusing an illegal loophole to operate its own off-license. However, the case was overturned.
Are Northern Irish SMEs losing out?
While the laws in Northern Ireland are very specific, this case has raised wider questions about whether licensing laws are preventing small businesses from innovating at a time when the industry is groaning under business rate hikes and the impact of the cost of living crisis.
In Northern Ireland, a study by experts at the University of Stirling suggested that licensing laws need to be rethought. The license surrender model in particular currently favours supermarket chains over independents, as the former have deeper pockets. “The study has recommended replacing the surrender principle with a per-population cap on the number of licensed outlets by type,” says BBC News.
Incumbent businesses, such as pubs, are also banned from objecting to licence applications from new operators, which means they are without recourse even when they feel their livelihood is threatened.
Wider calls for reforms
There have also been calls for licensing reform in the rest of the UK, and the Government has responded – though many argue that more action is needed.
As well as news that pubs will be able to stay open longer during the FIFA Men’s Football World Cup, there are changes afoot to noise rules, which could allow pubs to host more live music events.
The National Licensing Policy Framework, which was put forward last autumn, could also see the Government doing away with mandatory printed statutory notices for alcohol licenses, increasing the number of temporary event notices venues can apply for, and reforms to business rates and cuts to the cost of licensing.
While pubs in Great Britain have different licensing laws and are not in direct competition with supermarkets, these laws do still have a huge impact on the competitive landscape. In particular, they dictate how much red tape businesses have to contend with; how easy it is to get or change licenses and whether landlords can diversify to attract more punters with, for example, later opening hours or live music offerings.
The lesson landlords could take from Lidl is to understand what exactly their license allows, and to think about how they can be creative but still stay compliant.
Planet of the Grapes founder Matt Harris has over 25 years of experience in hospitality. Read his bi-monthly column for Startups now.
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