- Comment: The system will work...for the pubs that remain
- Analysis: Enterprise prepares for an MRO future
A number of Enterprise Inns tenants and lessees claim they have been ‘left in limbo’ by the pubco’s plans to radically overhaul its business.
Last week, the country’s largest tenanted pub operator unveiled a five-year plan, which will see it dispose of 1,000 pubs, convert up to 850 sites to managed units and run a commercial property business with about 1,000 assets.
However, Enterprise said it believes it can still generate significant income through the tied tenancy model and it would “continue to offer tied agreements of up to five years in length”.
The future strategy, derived as a response to the forthcoming market rent-only (MRO) option in the pubs code, has left a bitter taste in the mouths of several Enterprise lessees who have accused the pubco of placing them in a “position of uncertainty”.
One publican, who is approaching retirement age and has reached the end of his lease, was hopeful of a new 15-year deal but is now only being offered a five-year agreement. “We’re losing money that would have helped my retirement because, without a reasonably long lease, I have nothing to sell,” he told the PMA.
Another lessee said he thought his pub could potentially be a target for the new managed or commercial divisions. He said: “Would Enterprise make us an offer to go? We intend to take the MRO option at the first opportunity, so it may want to put us into the commercial property section. We’ve been trying to reassign the lease for five years and this doesn’t help. No one knows what sort of pubco they’re going to be dealing with.”
Another licensee questioned Enterprise’s actions, insisting that the “sensible approach” would have been to make the tie fairer, allowing for lessee investment and resulting in a more sustainable business model.
Fair Deal for Your Local campaigner Simon Clarke, who runs Enterprise lease the Eagle in Battersea, said the idea of a large, managed estate “will prove to be a fallacy”.
He said: “A managed pub will need to be turning over about £8,000 a week to sustain itself and the majority of the Enterprise estate cannot deliver such a level of turnover.
“I believe the game in town now for Enterprise will be to try and deny lease renewals and gain as much control as possible over their estate — that means denying renewal on the basis of the objection they want the property back for their own management — which, in many cases, will transpire to be a short time but offer them the opportunity to dispose of property with vacant possession.”
Enterprise chief executive Simon Townsend told the PMA: “I want to reassure our publicans that we’re absolutely committed to supporting them and helping them build a successful business. While our new strategy gives us additional flexibility to build a complementary managed and commercial property business, our core tied and leased operations will remain at the heart of Enterprise for many years.”