Punch to 'take hard line' over plans for the ban
Punch Taverns plans to take a less sympathetic approach to tenants who have failed to prepare for the smoking ban, according to KBC Peel Hunt analyst Paul Hickman.
His comments come after he took part in a tour with company management of Punch managed and tenanted pubs in Hertfordshire and Middlesex.
Approximately 5 -10% of tenants and lessees still do not have plans in place to address the smoking ban - Punch will be taking an increasingly hard line with them KBC analyst Paul Hickman.
Hickman said Punch had indicated it would be less willing to offer rent concessions and was prepared to part company with those licensees who had failed to prepare their pubs for the ban that is introduced in England on 1 July.
He said: "Approximately 5 -10% of tenants and lessees still do not have plans in place to address the smoking ban.
"Punch will be taking an increasingly hard line with them, will generally not support rent hardship in such cases, and will ultimately be willing to part company with those licensees.
"While this is going on, there could be a limited and short-term blip in performance.
"For example if 1% of tenanted pubs suffer 10% decline in income, this could translate into a 2% earnings effect."
Punch is also in talks with multiple licensee companies with a view to flexing lease arrangements to better fit those relationships. Hickman said: "Punch has so far led the way with corporate licensees and such companies are often better able to handle larger pubs.
"Development of this licensing channel may be an effective way for Punch to accelerate the conversion of circa 400 ex-Spirit pubs remaining to be converted at the January AGM."
On general levels of preparedness within the Punch estate, Hickman added: "We observed a good state of readiness for the 1 July smoking ban, both in terms of managed pubs, tenants' own preparations, and management's strategy and control of the situation."
