Shake up in the Spirit world
The next two years will see the biggest en masse transfer of managed pubs into tenanted and leased houses in 10 years.
Swathes of existing Spirit pub managers will go it (almost) alone as a lessee or tenant. And hundreds of other incoming licensees will face the challenge of making a former managed pub work as a tenanted or leased outlet.
Punch's dramatic swoop on managed operator Spirit last December means around 750 lower-turnover Spirit pubs - those turning over less than £10,000 a week - will be converted into tenancies and leases over the next two years. Current managers have a stark choice - leave the business, or take their first daunting steps into the world of the pubco tenant/lessee.
Pubco bosses point to the huge challenge this represents for both the former manager and the incoming tenant. The existing manager will lose the support of the managed back-office superstructure. Company HQ will no longer be on call to assist with things like accountancy, employment law, drinks promotions and menus.
How hosts have fared after the switchover
Punch recently transferred eight managed pubs in south Wales, bought from a private family consortium, into its estate. The incumbent managers stayed on at six of the sites and the MA caught up with two of them.
David Jones, Farmers Arms, Merthyr Tydfil
Asked what the main change has been in converting from a manager to a lessee, Jones is in no doubt: "The bills are the obvious answer." Jones took on a 10-year lease at the Farmers Arms on 28 November, having managed the pub for nearly three years. Initial costs included £3,500 up-front for stock and £50 a week for fixtures and fittings. Jones declined to reveal the rent but said it was around 20% of turnover. He is dreading his first utilities bill. The lessee has gone from a wage of £386 a week for himself and his wife to running at a loss.
Jones has already reduced the working hours of his five staff by about 14 hours a week, and works longer hours himself. He also put 10p to 15p on pints of beer. Jones says Punch's business support is "quite comprehensive", but admits it is daunting dealing with separate business advisors for different areas, such as beer dispense and gaming machines.
On his plans for the future, Jones says: "I want to see how the first six months goes. We already run the pub at a high standard for this area. The costs of maintaining that takes up most spare cash."
Brian Jones, Rose & Crown, Merthyr Tydfil
Jones admits he was "a bit blind" when he took on a 20-year lease at the Rose & Crown on 28 December. Despite having run the pub for almost six years, the cost of most utilities was a mystery. Jones says that overall he has a "fair deal", at the pub, which takes around £4,000 a week, although he dislikes the fact that Punch takes 50% of the AWP machine income.
Jones has a decent discount on beer under the terms of his "super-growth" lease. But he adds: "I'm finding the choice they've got doesn't suit my customers."
Jones' initial payments included £12,000 for the fixtures and fittings, £10,000 for the deposit, plus two weeks rent. He and his wife, Belinda, had been used to a wage of £44,000 a year. "If I don't hit that in the first 12 months, I don't know what I'll do," the lessee adds.
