Stuart Bateman hates the word "tie". The managing director of George Bateman & Son based in Wainfleet, Lincolnshire, wants a partnership with the tenants who run his 65 pubs.
"I don't want to tie people up or dominate them," he says. Since Bateman and his sister Jaclyn took over the family business, they have forged a new relationship with their tenants: the aim is to give them more financial security, a greater say in the running of their pubs and the beers they can sell.
We're talking in the Palmerston Arms in Peterborough, Cambridgeshire, a fine example of the Batemans approach. Karen King says her pub is "a beer festival every day of the week". She sells Batemans GHA, XXXB and Salem Porter; Harvest Pale from Castle Rock in Nottingham is also a regular.
But the Palmerston Arms' guest list, chalked on a board, will send the average cask-beer drinker dizzy with delight. It includes Oakham Inferno or another beer from the Peterborough brewery, White's Conqueror, Abbeydale Deception and Holden's Shaft Sprigger.
There'll be nine to 10 beers on at the weekend when bands will also be playing. All the beers come straight from casks in a temperature-controlled ground-floor room on view behind the bar.
"People come from miles away just to see the 'cellar'," says King. "We're the only pub in the area that serves all its beers by gravity. It's a good community pub — everybody knows everybody. If you need a plumber or a brickie, just ask in the bar!"
The Palmerston was a freehouse until it was bought by Batemans six years ago.
Initially it had a full brewery tie but a restricted guest beer list. Now Karen enjoys far greater freedom in her choice and range of beers.
"It's not a tie," Bateman reiterates. "Tenants pay a wet rent and understand what they get in return for the rent. They pay more when their pubs are busy; less when they're not so busy. They get added value for their wet rent and can see how they compare against a freetrader."
A tenant receives from the brewery a free repair service, discounts, free energy consultancy, health and safety advice, legal advice, a printing service, free website design, free building insurance, subsidised buying terms on a selection of goods and services, and a ratings appeal service, plus the services of one of Batemans' Profit Partnership Managers (PPMs), who will draw up plans to build an individual business and assist with its implementation.
"Some tenants choose not to use the service," Bateman says, "but if they run into trouble, they will suddenly need help. One PPM looks after 35 pubs — the ratio in the pub trade is usually 65 pubs per PPM."
Rent
Bateman says the total rent paid by a tenant is based on profit and turnover. "Our tenants can compare their rents with the freetrade and see that they run less risk. Most pubs closing are freetrade and the licensees there have nothing to fall back on."
Batemans runs a Capital Investment Agreement that allows its tenants to invest anything from £1,000 to £50,000, depending on each pub and its circumstances. "On every anniversary of the agreement, we will look at the turnover," Bateman says.
"If it's doubled, we will give double the tenant's investment. For example, if they invested £5,000 and doubled trade we would give £10,000 back. It's an incentive to build the business. The tenants feel they own part of the bricks and mortar.
"We also have an agreement that rewards tenants for increasing the business profits. If we agree a fair profit for a pub is £50,000 a year and it makes £60,000, we will pay the tenant 25% of the difference."
He says the Batemans strategy is to have a fair balance between the prices the brewery charges for its beers, the rent it charges and the support package it provides.
"Our approach is just common sense. We were the first to have our code of practice accredited by the BII (British Institute of Innkeeping) and we were the first to be completely transparent with our tenants. Tenancy used to be a dirty word, but our agreements are so fair that, after running our pubs, none of our tenants wants to go to a pubco or another brewery."
Bateman may hate the word "tie", but his strategy is based on running a family business that makes beer and sells it through its pubs. The pubs are based in Lincolnshire and neighbouring areas and he has seen at first hand the problems that the tenants and the brewery have had.
"In the 1980s there were lots of redundancies and many miners took on tenancies without any knowledge of how to run a pub. When they failed, someone else had to take over their pubs.
"Back then, many Lincolnshire villages had four to six pubs. We had to sell pubs to remain independent. Now some communities don't have a single pub.
"Pubs are hubs of their communities and we're looking at a lot of villages to see if we can reopen a pub and revitalise those communities."
The Palmerston Arms certainly vitalises its community, with its vast range of beers from craft breweries that draw cask-ale lovers in.
Karen King is a fine host and clearly delighted with the deal she has with her brewery.