Employee ownership – good for pubs?

A third of the pubs in Cornerstone Inns’ stomping ground of Winsford, Cheshire, had closed down in the past 10 years, said Damon Horrill, founder of the pubco, at the MA500 in Manchester today (16 May).

Many of the issues, familiar to a significant number of struggling and failing operators, were due to a lack of investment and innovation within pubs.

However, the co-operative evangelist believes his idea of a pub business with principles, where employees are in control of the business, can help to reignite certain parts of the trade.

Full employee buy-in​

Horrill said: “You try to find a different way [to stop closures], but the problem single tenants find is the difficulty of making money and a lack of investment, causing them to close, which happened to six of the pubs in the town.

“Our dialogue is all about community ownership and the belief that pub assets would be better off in a community-owned system and locked in trusts and not private or corporate hands.”

Cornerstone Inns runs with full employee buy-in, where staff reap the rewards and successes of the business, as well as a ‘clustered community’, which means all of the pubs in the estate help one another out.

A clustered model also allows the portfolio to buy in bulk as a national pub chain would to reduce the cost price of products to be able to compete with pub giants by offering better value to customers.

Some of the main reasons to consider an employee-ownership model include higher worker engagement and productivity; better connection with the community; and more jobs for locals which, in turn, will generate better community sentiment towards the pub, added Horrill.

“The big game-changer is the Employee Ownership Trust gave tax benefits to such businesses and that’s led to a massive growth in the formation of these things,” he added.

£3,500 tax-free bonus​

Horrill continued: “The trustee has a majority share and profitability is shared among the staff based on hours work and salary, but it goes to everybody. There’s also up to £3,500 tax-free bonuses for each individual per year.”

The future of one of Cornerstone Inns’ sites, however, is under contention following Ei Group’s decision to sell off a significant proportion of its properties in a restructure.

“Several weeks ago, Ei said our property for 20 years was going to be put up for disposal because of a reshuffling for the business model,” said Horrill.

“Four other pubs in the area are also in the same situation. We’ve got a crowdfunding pitch that is a community share initiative and it’s live, and we’re trying to raise money to purchase the building and, if we win, it will be because we’ve got the community behind us. If it works, we will be the second music venue in the country to be successful.”