Marston's is trialling an innovative reworking of the pubco/tenant relationship.
The company is to launch two new schemes — Phoenix and Apollo — that seek to derisk running a pub in the case of the former and inject more margin into pubs in the case of the latter. Phoenix has been trialled at 10 pubs and is an attempt to breathe new life into pubs not trading well.
Tenants will be offered the chance to run a Marston's pub with risk removed in a
quasi-franchise arrangement. The licensee will earn 20% of net take excluding machine income, out of which staff will be paid. In return, Marston's owns all stock and organises activity at the pub across five nights a week.
Tenants face a few safeguards such as being responsible for stock loss, but also benefit from a projected business development manager to pub ratio of one to 25 to 30.
Tenanted division boss Alistair Darby said:
"The idea is to regenerate the offer at pubs that are basically good. There's no such thing as a bad pub, just a bad offer." Darby said that he thinks the agreement will suit many of those who apply to run the company's managed pubs. "It's a stepping stone for those that are interested in running pubs."
Trials at 10 pubs have produced good results and now the company is planning to move another 80 to 90 across to the scheme.
The Apollo scheme sees Marston's planning to inject extra margin worth £100 a week or £5,000 a year into its pubs. The company wants to trial Apollo in 50 to 60 pubs within its core estate of pubs on substantive agreements.
Tenants would be offered the chance to switch to freetrade discount levels from barrel one - bitter at £135 a barrel, premium bitter discount of £135 a barrel, standard lager at £170 a barrel and premium lager at £180 a barrel. Licensees would have the extra discounts rentalised, but at a rate that assumes 8% to 9% decline in barrelage, in line with the market, over the next three years.
A pub with an annual barrelage of 200 barrels that chooses to take part in the scheme would be rentalised on just 182 barrels - Marston's takes the projected decline over three years into account straight away. The effect of this is to create the extra £5,000 of income.
Darby said: "There is a whole load of extra discount that is not rentalised fully, so from day one the licensee is £5,000 better off per annum. This margin is available for hosts to invest in the business. If they then out-perform the market they generate a lot more margin."
Licensees will be required to do their business with the company online saving cost for Marston's. Another possible saving for Marston's would be the potential elimination of the need for beer flow monitoring equipment.
"There's a real chance here for a more open, trusting relationship," said Darby.
"We would expect volumes to be better, for there to be greater tenant stability and to start attracting even better quality tenants."
Darby said Apollo resulted from Marston's thinking: "How do we put margin into pubs without exploding our own business".
He added: "The question is what kind of things can we put in place that generate returns back at the ranch. With Apollo, we're putting the first foot forward. We think we've got to put an extra £100 a week into licensees' businesses to make a difference in terms of allowing them to invest in something, to turn the dial."
Licensees already in place who take part in the scheme, switch by way of a side letter to their existing agreement. Fair Pint has condemned the new Marston's freetrade prices deal for not including a reform of the way in which rents are calculated.