Dixon: it's time to change not churn

What strange times we live in. Fair Pint sitting around the table with BBPA, Ian Payne buying pubs and reducing rents, GMB wanting to close breweries and make its own members redundant.

Burnley getting promoted. Whatever next? The answer may well be a turning point for the industry. Frankly there needs to be one.

It is not often that I allow my passion to cross the line into anger but the blasé approach by some individuals to the life-changing disasters that they have contributed to is staggering. In the USA people are not sacked, they are "let go". Grandfathers don't die, they pass over. Family pets are put to sleep not murdered by lethal injection, and in our sector we ruin lives, take parents' savings, destroy marriages and we simply call it "the churn".

"How's your churn?"

"Fine, only one in four."

"Oh, we are churning a few more, but no worse than anyone else."

If you have half your estate in failure then whose fault is it? You have either set the terms wrong or do you need to sack (sorry, "let go") the persons doing the recruiting?

I actually suggested at the recent MA summit a Top BDM Churner award… Been made redundant? Obtained a tidy sum and want absolutely no chance of still having any of it in six months' time? Then get a pub with **** ***** — 97% failure guaranteed! Of course, the next issue is that we can't find anyone to take our pubs — there weren't that many people swimming in the sea the day after Jaws turned up.

So what needs to be done? McDonald's appears to have a nine-month training requirement (self-funded) with an official "churn" rate of less than 1%. We have less than nine minutes' training and wonder why we have so many casualties. Nearly all companies have a commitment to some form of pre-entry training and all will tell you the chances of a person still being in a pub after 12 months rises between 15% and 70% if they have undertaken their course.

Why do we allow so many not to do it? Our new CEO at the BII, Neil Robertson, feels we need to address the literacy and numeracy skills of potential applicants and he is right. And no long-term agreements until you complete the training needs to become the standard.

Dick Turpin​

The Business & Enterprise Committee was critical of the amount of information given to new applicants. This can easily be addressed by adopting a clear commitment to transparency — ie, number of previous DPSs, local rents, plans to spend on pubs in the vicinity. How we have calculated the rent? Are all the safety certificates in place? What do we gain by concealment? Let all the facts be known and shown.

When it comes to the machine tie I previously said that if Dick Turpin had been alive he would be in charge of a company's machine policy. For when it comes to AWP machine income no one could accuse breweries or pubcos of being one-arm bandits. No, they take it with both hands!

The so-called 50:50 split is in reality more like 90:10 and it is simply wrong. Companies that "rentalise" the tenant's share — Punch, Enterprise, S&NPE, Marston's, Trust, Fuller's (I know it is hard to believe), Charles Wells (that was not a misprint) — need to review and cease this practice forthwith. Punch and Charles Wells have already agreed to do this. I look forward to the others following suit.

I am not sure the industry can ignore two Parliamentary select committees' recommendations to release the tie and this is a worry. Licensees are not machine experts — giving them the keys and access to cash flow will initially be well received, but inevitably income and machine management will deteriorate. The solution should be to offer licensees a fixed percentage of the take, give them 35% and the company accepts the remainder after paying the supplier.

I do believe we rent pubs on over-optimistic and unsafe targets. If every licensee hit their fair maintainable trade we would have to reopen two breweries! We are (in beer terms) in a declining market but we fail to factor that reality into current letting. Too many companies' terms signify that "you may be here today but you won't be here tomorrow!" All BII-accredited codes of practice guarantee a disclosure of how rent is calculated, but the current levels of information provided are patchy at best and, unless my pound-shop calculator has a malfunction, they show worrying discrepancies in the gross profit analysis. More in-depth detail is required. If not, the question "what have you got to hide?" applies.

Establishing a "fair rent dispute scheme" is a must; finding chartered surveyors in which licensees can have confidence to act impartially will be the issue to address.

Compromise​

Codes and their enforcement have always been an emotive point. Dealing with complaints and disputes via the BII help-line, I have to say that issues are usually dealt with promptly, especially by the main pubcos, and I believe (although I'll get pilloried for it) Enterprise's Simon Townsend and Punch's Kevin Georgel are persons of genuine integrity. We do, though, as an industry need to toughen up our processes in enforcement of the code.

"If you can get cheaper buildings insurance (on a like-for-like basis) then we'll match it" is already Enterprise and now Punch's policy, so others should have no problems in agreeing to this.

The crux of the Bec report concerns discounts and the price of tied beer products. To have achieved the highest discounts in history and pass on none at all is indefensible. I wonder, returning to Fair Pint's original approach of companies with more than 500 pubs, if they all agreed to give a minimum percentage of their discounts to their retailers could a compromise solution be reached?

If a full-scale investigation is avoided, this in my opinion would be a price worth paying for companies — and would create much needed profit for thousands of hard-working families' businesses.