Pubco CEO defends business model: Part 2

Last year, long-time friend and pubco CEO Roland Rodent announced that he would be retiring in June 2011 after a long and distinguished career in the drinks industry.

Prior to a celebratory dinner held in his honour, Roland kindly agreed to an interview in which he shared his invaluable insights with Publican Morning Advertiser readers​.

Now, on the eve of his departure and with the BISC about to reconvene, I met up with him again to assess what progress he and the other pubcos have made in addressing the much publicised problems currently besetting the pub trade.

So Roland, would you say the industry has made any real progress since we last met?​

Absolutely! We've made huge strides Bob, huge strides.

Really?​

Oh yes. Take the code of practice for example; it's delivered tangible benefits for our tenants. The feedback has been very positive.

What benefits exactly?​

They outline the terms of our agreements quite clearly. Nobody should now be under any doubt as to what they're letting themselves in for.

Well the cynics might suggest that all they do is provide a very basic level of transparency; one that should have been in place from the outset?​

Well there will always be cynics out there, Bob. We'll never please them no matter what we do. Our industry is moving forward, make no mistake.

But wouldn't it be fair to say that you have yet to implement a single recommendation put forward by the BISC?​

I wouldn't agree with that. After all, we've phased out upward only rent reviews.

Yes, and replaced them with RPI linked agreements. Are these not merely upward only rent options in another guise?​

RPI can go down as well as up.

Well it's only gone down once in the last eleven years, and then by a pitiful 0.5%. Isn't it also the case that such agreements are a very neat way of side-stepping RICS guidelines on rent setting?​

I think you're being overly cynical, I really do. We're working with our tenants to ensure we build trust and deliver real partnership.

OK. So what else have you come up with?​

Well, we've produced a new range of agreements which offer tenants a wide range of options, including FOT and guest ale provision.

Yes, but those concessions will be paid for in additional rent so in reality you haven't given anything have you? In fact, given the market, isn't it in your interests to transfer a declining income (wet rent) to one that is guaranteed (dry rent)?​

We're offering real choices here Bob, real choices.

OK. Let's move on. Would you not accept that pubcos must share some of the blame for the position our industry currently finds itself in? ​

Absolutely not. The BBPA have made clear on many occasions that our problems are linked to the recession and government taxation pure and simple. I'm also supremely confident that we'll weather the storm and that in time things will improve. Our tenants just need to be patient and have faith in our judgement.

Wouldn't it be fair to say that in your haste to expand property portfolios you and other pubcos pushed property valuations to unsustainable levels and now that the market's collapsed you're basically buggared?​

I think you're being overly pessimistic Bob, I really do. I'm confident that we are already beginning to see the green shoots of recovery. Trust me; we know what we're doing.

Well, on trade beer volumes continue to plummet. According to the BBPA's beer barometer, sales are now 45% down on 1997 levels. Does this not suggest an industry on the precipice? ​

The data I have suggests things are beginning to level out. In fact this might be just the time for those people considering taking on a pub to pop along and see us. We have some fantastic opportunities out there, we really do. All we need are people who know what they're doing; the entrepreneurs of this world. We've got too many whingers out there at the moment that's the problem, all of them blaming everybody else for their own shortcomings.

Well I have to say I'm currently being bombarded with e-mails from pubcos offering me numerous 'fantastic opportunities'. Would it be fair to say that churn has reached unprecedented levels?​

I can't speak for the other pubcos, but my company has seen a large number of tenants reach retirement age in the last 12 months. This accounts for the spike in vacancies we are currently witnessing.

How do you respond to those who say that the pubco hierarchy don't give a damn about their tenants and are solely preoccupied with lining their own pockets?​

Absolutely not. Our mindset is firmly focused on the long term sustainability of our estates.

Really? Is it not the case that your company is in danger of defaulting on loans and that scope for manoeuvre is severely constrained by the fact that you've already sold off your most viable assets? ​

Nonsense. Our financial woes have been blown out of all proportion by the press. There are one or two problems I grant you, but we're working hard to put things back on track, both for our tenants and our shareholders.

Interesting you should say that Roland because your company's latest trading statement shows a 14% drop in profits yet board members enjoyed an average 20% increase in salary. Is this your idea of a sustainable long term strategy?​

Well if you want to get the best you've got to offer the right incentives.

Like the company yacht?​

I have no idea what you're talking about.

WikiLeaks quotes you as saying to creditors "Come and get the keys to your pubs but don't take the company yacht; the board member's wives do so enjoy those excursions to the Caribbean." ​

I was misquoted. Those trips are working holidays.

So next month Roland you bid the industry farewell. Presumably your company will be giving you a golden handshake, a tidy severance package, share options and an enormous pension in recognition of your fine work?​

I'll make no apologies for that. I've made that company what it is today.

Indeed you have. In August 2006 your company's share price reached an all time high of £21.50 yet today it stands at a mere 14 pence. Presumably you feel obliged to take some responsibility for this?​

You have to expect some volatility in the stock market Bob. I'm confident that the share price will return to former levels once we emerge from this recession. Our shareholders just need to be patient.

Do you have a message for the BISC?​

Yes I do. They need to mind their own damned business. We can put the industry back on track. We don't need politicians like that Mulholland fellow interfering in something they know nothing about. We'll take care of this

How much more time do you need?​

Give us another five years and we'll sort everything out.

Do you think the BISC will swallow that?​

I don't see why not. They know we have the best interests of the industry at heart. I sense real trust beginning to develop between us and the BISC I really do.

Roland, on behalf of all our readers, may I take this opportunity to wish you a happy retirement. ​

Thank you.

Robert Sayles used to help his wife run the Hakuna Matata pub in Birmingham.​