The pubco model: viable concern or busted flush?
Other than perhaps the debate surrounding the smoking ban there are few issues which currently inflame the passions of many a tied licensee more than the beer tie.
When a City analyst called Douglas Jack sent out a piece of research last week in which he argued the case for the tie's retention I picked up on it. I freely aired Jack's views (see www.thepublican.com/city).
It didn't take the mental capacity of a nuclear physicist to predict that considerable opprobrium from a select coterie of Publican readers would come his way. Sure enough it did, and almost immediately.
Many who read the story posed the question 'what does some City slicker know about pubs?', effectively questioning Jack's right to have an opinion on the subject. How dare he have such an opinion? some fumed, rather opinionatedly.
As it happens I know of at least one high-profile pub game watcher in the City who knows exactly what it takes to run a pub and still supports the pubco model, but I imagine this knowledge won't soothe the 'irked' out there.
Others argue that with a bit of tweaking - particularly an improvement in the relationship twixt tenant and landlord and the tie becoming more flexible - the pubco model could work in the long run. BUt it can't carry on as it is, these same observers opine.
Not everyone sees the world the same way of course. I also regularly speak with City analysts who have grave doubts about the efficacy of the pubco model full stop, believing it is only a matter of time before everything goes what we motorcyclists euphemistically call "rubber side up".
That's what makes a market, y'see; buyers and sellers.
A while ago a pubco executive said to me that the one 'plus' of the economic downturn was that it revealed the bad operators in the industry; that the good times had "papered over the cracks". He may be right. Circumspection disappears in prosperous times, whereas everyone candidly accepts now that businesses went for silly money in recent years.
But that was then. Now the job is to consolidate and get businesses ready for the inevitable upturn.
When it finally arrives lessons will hopefully have been learned and what cracks there are will have been well and truly polyfilled…
