Dixon: 10 areas for pubco change

Industry expert Phil Dixon has told tenanted pub company chiefs that the pubco/tenant relationship must change in ten areas.

Dixon, who was addressing the Morning Advertiser and M&C Report organised Tenanted Trade Summit at the Cranfield School of Management, told bosses from the tenanted sector they must look at the following areas:

1. Disclose rents to licensees with permission in your local area

2. Disclose any investments or potential sale of a pub

3. Disclose the number of Designated Premises Supervisors that a particular pub has had in the last five years

4. Match lower insurance premiums that tenants obtain and give a rebate on any surplus

5. Stop rentalising the AWP machine tie and offer free-of-tie on machines

6. Provide more detailed disclosure on rent reviews

7. Honour Fair Maintanable Trade figures and stop penalising successful licensees on rent reviews

8. Offer cheaper, fairer independent valuation

9. Look at making Codes mandatory

10. Increase licensees share of discounts

Dixon told the audience that the failure rate in the industry was far too high with the churn rate at 40% in some pub companies. "You've got to address that," he said. Pre-entry training needs to be mandatory — the majority of licensees take on a pub with just one day's training under their belt.

Dixon said he was coming across too many "lifestyle applicants" signing agreements they don't want.

He said he'd recently come across three separate cases of people who thought they'd signed a Tenancy-at-Will agreement finding they'd actually signed a five-year agreement.

Dick Turpin​

He compared some tenanted pub companies to Dick Turpin in relation to the machine tie — "taking with both hands" by rentalising AWP earnings.

"You've got yourself into a corner on this," he said. He named Punch, Enterprise, Marston's, Scottish & Newcastle Pub Enterprises, Trust Inns, Fuller's and Charles Wells as guilty of rentalising tenant's machine income.

In the case of Charles Wells he said it comparable to finding out "Mother Theresa was running an escort agency from the back of the convent".

Dixon praised Greene King and St Austell for not rentalising machine earnings. There was also a plea for full support for the BII's low-cost rent dispute resolution which would be binding by deed of variation.

It would remove "corporate bullying" in relation to the cost of going to a full arbitration. Dixon argued that the pub companies should stop "penalising success" by moving the goalposts on Fair Maintainable Trade.

He cited the positive example of Brakspear, which had only increased rent by inflation for one of his most succesful licensees since 1992.

He also referred to a front page story in the Morning Advertiser from last year in which former Mitchells & Butlers chief executive Tim Clarke had warned of a 40% decline in beer volumes over ten years.

Dixon said that this should be factored into Fair Maintable Trade calculations which he called "Fantastic Mythical Target".

He also argued that there is a clear difficulty in relation to those companies operating both a managed and tenanted estates, with some tenants undecut on price by managed pubs owned by the same company.

Dixon told delegates: "Standing still is not an option — we must adapt and evolve with the changing market. Let's work together to repair the damage to our sector."