It looks like 2025 is coming at us full force. Hot off the press for the start of the year was the news the number of pubs in the country has fallen below 39,000. Some 34 pubs a month permanently closed last year.
Quite dismal reading but something that shouldn’t take anyone by surprise when they look around their local area and see the number of pubs sitting empty, displaying a ‘For rent’ notice.
Many of these pubs are within the leased and tenanted sector and are small businesses run by ordinary folk who work hard to make ends meet while contributing greatly to the community in which they live and work. However, many of them have started 2025 with trepidation and dread.
When the combined apocalypse of national insurance hikes, increases to wages and reduction in business rates discount hits this April, these are the people who it will affect the most and who are least equipped to deal with it due to the rigidity and small margins of the model in which they work.
The leased and tenanted pub model is a great model in that it allows many people to achieve the dream of running their own pub without having the massive capital investment that would be needed to do this independently. It works generally on the principal of both the publican and pub company coming out with equal benefit. However, if the everyday running costs are rising along with beer prices and rent hikes, it can very easily become out of balance.
In my own pub portfolio, I have a mixture of pubs that I own and that I have leased. I have experienced working with several of the big pub companies over the years and my experiences are vastly different.
Open to conversations
I have always worked fairly and transparently with any pub company I have engaged with. I have had the pleasure of meeting and working with people at the highest level in these companies but the outcomes from different pubcos has been immensely varied.
My experience with Greene King, for example, has been superb. They have always worked in true partnership with me. Throughout the pandemic and cost-of-living crisis they have been open to conversations about rent and profit sharing. They have always maintained their side of the bargain and been fair. It has been a truly professional business arrangement and one that I hope to continue for many years to come.
On the other hand, my experiences with another pubco, who shall not be named, has been traumatic, stressful and difficult. Many of the people who I came across were petty and unprofessional. Their staff changed every five minutes and It appeared to me that there was no cohesive strategy,
For illustrative purposes, I rented a high street pub for £45,000 per annum from the aforementioned pubco. When things got difficult post-pandemic and our shopping centre closed, I highlighted to the pubco in question footfall was now non-existent. They agreed with this. I asked for a reduction in rent and this was granted for three months.
This, however, included the Christmas period so when our income increased, this reduction was removed. (Now we all know what happens to pubs in January and February, and why we need to make money in December but this seemed an alien concept to this pub company, which would only be guided by their rules).
Eventually, after much frustrated conversations over several months, I asked for a permanent reduction in rent. This was not granted, therefore I left the pub. I lost money.
I was a multi-award winning lessee of this particular pub company and my record with them was impeccable. They agreed wholeheartedly there was nothing I could do differently to make this pub work at this time. Everything that was happening was purely circumstantial and out with my control.
The pub shut when I left and it remained closed for more than a year.
I’m reliably informed the cost of keeping an average pub closed for 12 months can be well over £40k as full business rates, gas and electricity have to be paid, as well as security costs.
Reopening that pub can cost anywhere from a couple of thousand upwards, depending on compliance, maintenance and refurbishment. This doesn’t account for the loss of income from rent and beer sales if the pub is tied.
Nine months after leaving the pub it was being advertised on social media for rent at £1 a week. How ludicrous is that?
Lack of business sense
If the pubco had sat down and addressed the situation with an open and professional conversation, they would still have the pub open and being run to a high standard with the costs of shutting down and reopening avoided.
They would be getting beer sales and a reduced rent that would have been much more than they are now getting on a temporary management agreement with the new lessee.
Am I bitter? No, but am I angry. Very angry at their lack of business sense and partnership working. Almost two years on as a multi-site owner who doesn’t live in any of my pubs, I can pass it of as a bad experience. I wouldn’t be so fortunate if that had been my sole business and home.
I don’t have to worry about dealing with this pubco anymore. However, as I see more doom and gloom lurching towards hospitality in the spring I do worry about the many ‘Ma & pa’ businesses out there that will struggle. So, I have one request to any pub companies out there who might be reading this...
Please be sensitive. It might just be just a ‘job’ to you but to many of the publicans you speak to what you’re talking to them about is their whole life, it’s their home, their family and their community. If they are asking for help it’s because they need it. These are genuinely proud people who run your business with passion. Work with them in partnership. Don’t look down upon them.
Have a business conversation, they know you are not a charity and don’t expect any from you. Insist on clear figures and transparent accounts. Make well-thought-out business decisions and consider that maybe a longer-term view of the situation should be taken. No one would have predicted five years ago the traumatic journey people in hospitality have had to endure. If they are good people, fight for them.
The best pubco and lessee relationship is an equal partnership. When that relationship is achieved it means greater success for both sides. Make sure the people you employ know that too. Maybe, just maybe, together we can get through this.
