BISC's pubco report: the trade's view part II
Admiral Taverns pointed out that one of its strengths was allowing its BDMs flexibility to negotiate with the licensee on
the tie and pricing.
It has 140 pubs that are free-of-tie on bottled products, more than 130 free-of-tie on cider and 600 free-of-tie on flavoured alcoholic beverages.
More than 100 licensees are entirely free-of-tie and more than 50 of its pubs have guest-beer rights. BDMs are able to offer discounts of between £25 and £130 per barrel.
Admiral has invested £200,000 in implementing its new code of practice.
Nigel Wakefield, a former membership development consultant for the BII’s (British Institute of Innkeeping’s) Wessex region, expressed some concern that firms were attempting to circumvent the latest RICS guidelines.
Wakefield suggested it would encourage other companies to follow suit. “Certain companies would appear to be stepping back
from using RICS members and insist that their BDMs and area managers conduct negotiations, relying on the naivety of the lessee to accept their findings rather than use RICS’ guidelines.
“In certain instances the BDMs had no knowledge of these guidelines,” he said in his submission to the committee.
A multiple Enterprise Inns licensee claimed that he was told any free-of-tie lease would fall outside of the pubco’s code of practice and be subject to upwards only rent reviews.
Simon Daws, who runs the Royal Oak and the Gloucester Old Spot in Cheltenham, said he conducted his relationship with Enterprise in a “business-like and formal manner”.
He said his free-of-tie question was asked partly “to test the credence of their claims to offer free-of-tie deals and to have removed upward-only rent increase clauses”.
But he said: “Enterprise made it clear to me that should I wish to make a free-of-tie rent proposal, that it would be considered under a new 20-year commercial lease and would fall “outside the scope of the code”.
A licensee who used to run around 150 pubs for Marston’s said the Government should consider banning the tie for all pubcos with over 50 sites.
Mark Charman — formerly Marston’s largest multiple retailer with around 30 pubs at any one time, around 2% of its estate — now runs a free-of-tie estate with private landlords or small pubcos.
“I still come across numerous tenants that are not only dissatisfied with their pubco but usually have a desperate story to tell,” he said.
“The new codes of practice seem to be treated as a bit of a joke. Forms are filled out, tenants are provided with information and boxes are ticked, but the underlying issue of a tenant not being able to make a decent living still remains. Furthermore, the aggression with which tenants are treated does not appear to have dissipated.”
Licensee Robert Wynne, who operates three pubs in Blackpool, highlighted the effect of the beer tie on the price of a pint.
“In my free-of-tie venues. my headline price for lager is £1.95 a pint; in my tied venue my headline lager price is £2.80.”
He believes the tied pub model was flawed from the start, but “did just about work when times were good, inflation was low and trade was growing”.
A multiple Enterprise Inns licensee claimed that he was told any free-of-tie lease would fall outside of the pubco’s code of practice and be subject to upwards only rent reviews.
Simon Daws, who runs the Royal Oak and the Gloucester Old Spot in Cheltenham, said he conducted his relationship with Enterprise in a “business-like and formal manner”.
He said his free-of-tie question was asked partly “to test the credence of their claims to offer free-of-tie deals and to have removed upward-only rent increase clauses”.
But he said: “Enterprise made it clear to me that should I wish to make a free-of-tie rent proposal, that it would be considered under a new 20-year commercial lease and would fall “outside the scope of the code”.
The Federation of Licensed Victuallers Associations (FLVA) said it did not support a fully free-of-tie lease and fully accepted the pubcos right to retain the beer tie.
It called for a removal of the wine, spirit and mineral tie from all existing agreements, but also accepted this would have to be accompanied by a rent review.
On the question of price increases, the FLVA said it believed that pubcos should only increase prices to tenants at the same time and level as wholesale prices are levied on themselves.
It believes that free-of-tie tenants would receive inferior discounts from brewers, and that any loan arrangements made with a brewer would probably tie them in to a single brewer.
