Banishing the f-word from pubs — failure

A very senior tenanted pub company chief, a member of the progressive wing, told me a few weeks back that he thought a certain level of tenant failure was healthy.

You know how the argument goes: that a proportion of licensees are ill-suited to the pub trade and their rapid departure is a good thing. It means they can move on to something that better suits them and frees up pubs for people with fresh ideas, better equipped to make a success of them.

The argument is akin to the one economists use about unemployment — an economy needs a level of available unemployed manpower to redirect towards expanding companies. But talking about "healthy failure" in the context of the tenanted sector betrays a clanging lack of sensitivity.

The world's a complex place — and apportioning blame in precise, quantified amounts is impossible. But the large tenanted companies must take blame for the acute political scrutiny that has come their way.

Too many licensees have been struggling and failing within their giant estates for any MP in touch with constituency issues not to have noticed. The natural and proper outcome has been spiky questioning of the tenanted model — and whether the tie has been applied properly.

Some, like Leeds North-West MP Greg Mulholland, have drawn their own conclusions based on the things they've seen — and will be hard to sway. There's a host of items that have not been the fault of tenanted pub companies: the recession, the smoking ban, cheap supermarket alcohol. But then there's also

a host of things for which the pubcos are firmly in the frame: letting pubs to under-qualified people, allowing people to buy tenanted pubs for excessive premiums without realistic business plans, owning too many poor quality pubs while ratcheting wholesale prices and rents to maintain profits at the expense of tenants.

Licensee failure is never less than a personal tragedy. On a corporate level in our sector, licensee failure always raises a question mark over the competence of the pubco itself in a context where it had options to have done better.

The future has to be different and treating failure in a blasé way will not get the major companies where they need to be.

Surely, it's possible to imagine a different kind of tenanted world; one where the tenanted pubcos own the right quality pubs, choose well-qualified tenants, ensure they receive the right training, and provide ever-better support.

This stable, sustainable world will require that companies do not penalise success through ramping rent or take the easy profits growth route by pushing through hefty wholesale price increases year after year. Failure will never disappear entirely.

But it's like a disease that has been widespread in the sector and must now be pushed to the point of extinction.