GK boss: tenanted sector faces structural challenge
Greene King boss Rooney Anand has issued a stark warning about the structural challenge facing the leased and tenanted pub sector.
He said: "There are still significant issues for the existing tenanted and leased model, with many sub-optimal locations, licensees and offers, beer volumes in permanent decline and rising cost pressures.
"Many tenanted and leased pubs are no longer competitive with either managed pubs or the off-trade and cannot sustain enough profit for both licensee and landlord."
Anand told the Morning Advertiser that there was "no magic bullet or alchemy" available for the challenges, some of which were "structural".
The solution was about "right pub, right licensees, right offer" and "getting back to the fundamentals" of good retailing.
The company has launched a mystery guest programme caled "Missing Something", and introduced "Business Builder" offering a wide range of products at discounted prices with training support, capital investment including signage and merchandising advice.
Greene King has also retained its Independence Pub Company turnaround division, with 400 tenanted pubs out of a total of 1600 across Greene King and Belhaven.
The company also ensures that all financial support for licensees is contingent on them signing a Value Service Quality (VSQ) contract by which they "agree to to improve various aspects of their offer and environment".
A total of 95% of tenanted pubs are now let on substantive agreements with average licensee tenure of three years and nine months.
Anand said that the Greene King has been aided by its long-term preference for traditional shorter-term tenancies.
Taking away 11 long leases that came into the company as a result of the acquisition of Morland's, long leases make up less than 10% of the company tenanted tenure.
