Enterprise offers free-of-tie pricing

Enterprise Inns is to introduce a new lease from July that offers free-of-tie pricing in return for higher rent and abolishes rent reviews.

The new 10 year to 20 year lease, called the Retail Partnership Lease, will see rents rise in line with the Retail Price Index (RPI) over the course of the lease.

But Enterprise hopes the new lease will remove "potential disagreements" over the valuation of tenants' improvements or trading goodwill that can crop up at rent review.

Discounts for beer and cider will be increased to a maximum of £155 per barrel with licensees also able to go free-of-tie on bottled beers and ciders. There will also be a tie release option for AWP machines.

In addition, Enterprise will offer a free-of-tie guest ale option for beer sourced from small brewers who are members of the Society of Independent Brewers (SIBA) in all new agreements from July this year.

Pubs will need to source cask ale brewed within an approximate 20-mile radius of the pub.

Enterprise is also following the route of Everards by offering a free-of-tie option on all cask ale for any micro-brewer taking on an Enterprise pub.

Chief operating officer Simon Townsend said: "As well as providing further impetus to our existing support for UK-brewed cask ale, we believe that these initiatives will enable locally produced cask ales to be delivered to our estate with a lower environmental impact than would otherwise be the case."

Townsend said the lease would be on offer to existing licensees who will be given the chance to change to it no later than at rent review. "It will be possible for our licensees to opt for this new agreement," he said.

Enterprise will also be beefing-up the information it supplies to new licensees with a document that provides a five-year trading history of the pub. The document will also list the capital investment schemes that Enterprise has planned for its pubs in the vicinity.

The introduction of the new lease by Enterprise at the start of July means that the company has stolen a march on Punch Taverns, which is not expecting to be able to introduce a lease with free-of-tie pricing until the start of 2011.

Offering a free-of-tie option is one of the requirements set for tenanted pub companies by the Business Innovation and Skills Committee with a deadline of June 2011.

Ebitda in the six months ended 31 March 2010 was down to £204m from £226m the year before. Enterprise's average net income per pub was £31,200 compared to £32,200 the year before.