News Article Comments : A modest proposal for helping pubs

A pub near to me closed the other week. One of my customers commented " good news for you George, you'll get all their old customers!". I hadn't the heart to tell him they closed because they didn't have any customers (From George Halliday).

The smaller PubCos are by and large keeping Schtum for the time being hoping that Enterprise and Punch will take all the flak. A few are quietly pushing the line that they are getting accreditation for their changed codes of practice and the marvellously intelligible language they use in their documentation the lessees sign. Documents that take into account nice things - like 'we love being touchy feely with our lessees' as if they actually care about their tenants.

I'm proud to say that Punch took a lot of ideas from a business plan that Steve Corbett and I did for one of their sites - a site we knew well and were prepared to take a major risk on - but, having seen our business plan, and having been mightily impressed by it, Punch increased their rent expectations by 20K. We walked away because WE KNEW it would not stack up. It was taken on perhaps six months later and reopened after major works with an interior that was exactly as we had described (and drawn plans for). The incumbent is an experienced operator who didn't know our area as well as we do and they are losing their shirt. What's Punch doing to help? I don't know but will ask and report back.
I've been considering my place in all this world of pubs for a long time - long before making my first post here in February 2008 by which time I'd had WAY more than enough of the PubCo experience - I had already grown to assume that the pub industry is the infuriatingly difficult to pin down thing that it is because there are so many shades of experience and opinion about all things that happen on all sides of the many fences that make it the way it is. I agree with a lot that Ken Nason says when he's not spitting a dummy about someone having a go at him for his cold hard opinions. What Ken misses out on - and others have already touched on this - is that right now there are NO OPTIONS for many people in the pub business. If they are in a hole there is NO getting out. They can't sell - even at a major loss because no one's buying. A few cash rich outfits (very rare considering the trends of the last decade to stack up borrowing against future income) may still be in the market for snapping up low cost freeholds but the people who are REALLY suffering are tied and there is no interest in that market because even people who could afford to risk taking on a tied lease - smaller multiple operators - know that margins are so squeezed in favour of the PubCos there's little point in taking on the hassle. Ken says one thing is FACT as if it's black and white when, as always in life, it's really all shades of grey. Except when you have a tied lease you want to get rid of and your whole life and family is wrapped up in it and the PubCos's turning the screws ever tighter on you but you've got no takers. And THAT is black and white bad.


If AWP rental is £50 a week to us, the tenant, at LEAST half of that bounces straight out of the Machine Operator's account and into the PubCo's as a royalty payment for the privilege of having the machine in your pub. When the profits on machine income are divvied out between the tenant, the operator, and the PubCo, the PubCo has already received at least the same income as the Operator's rent in royalties so it is quite clear that PubCo earns more cash out of machines than either the tenant or the Operator. Ehrm. For doing precisely nothing other than letter exchanging and rubber stamping when setting up the exclusivity deals. £100 million a year? If that were retained by the 25,000 or so pubs who are AWP tied would it make a difference to their viability? Maybe. If anyone has read about Machine Operators getting out of the pub market to concentrate on other areas of their portfolio and wondered why. Well here is the answer: They have been losing money in the tied pub sector just as lessees and tenants have. Which Elephant in the Room actually IS making the money? EXACTLY. In this context BBPA's hand wringing to the Community Pubs' Enquiry asking the government to reduce games tax is hard to swallow.