Time to reshape the pubco model

In these desperate times, with pubs standing empty in record numbers, it was deeply depressing to hear recently a group of talented BDMs analysing the ills of the business. They were keen for their pubco bosses to take on far more flexible approaches than even the crisis measures currently being adopted.

Reduce the number of pubs we look after (35 to 40 rather than 60 would be good). Cut the rents, and go easy on RPIs. Offer considerably more discount. And provide, nay insist on, far more licensee training.

These are the solutions we need to cope with the greatest crisis the trade has ever faced, said the BDMs. And they should know. For these comments came from the elite group of BDMs attending the Association of Licensed Multiple Retailer's Ashridge course as part of this year's Operations Manager of the Year awards. Undisputedly, these are the industry's best. Yet even they can't make their pubs operate as productively as they'd like. Despite the emergency measures now in force, their companies' basic structures prevent them from doing what they feel needs to be done. How frustrating and depressing is that?

Last week, at the Ops Manager awards ceremony, the frustration and depression deepened further as fresh confirmation emerged of the yawning gap between what's going on and what should be happening. Everards' managing director Stephen Gould — a converted pubco manager himself — set out his altogether refreshing views on relations between BDMs and their bosses back at pubco base. Headquarters should not be directing how BDMs work with their licensees. Instead, said Gould, BDMs should be good enough to work out their licensee relationships for themselves and build trust and understanding between both parties.

Support packages​

In the past year, £13bn has been wiped off the value of the top 10 pubcos. Global economic meltdown has played its part. But how much of that lost value could have been preserved if the pubcos had done what their BDMs wanted them to do years ago?

How would the pubco business model have fared if the kind of support packages we're starting to see now had been on offer throughout the past decade?

If the pubcos had been content to nurture their model at a steadier pace, one fashioned for long-term growth rather than on ramping up returns as fast as possible? If licensees had been thoroughly interviewed and assessed before being given a valuable retail asset? If they'd been trained in the way franchisees in other industries are, rather than being left to sink or swim? And if a realistic view of their abilities had helped inform fair maintainable rent levels, rather than imagine that a Dragons' Den denizen was running the pub?

We'll never know. But what's certain is that the old ways of doing business are dead. Let's hope the new ones are more in tune with the views of the elite BDMs. They'll have to be if the pubco model is to survive.