Thursday, November 12, 2009

When we were talking about setting up Fair Pint Campaign three of us would go out on Sunday nights with the idea of finding tied pubs to see if we could find a lessee who was happy with their situation. Our pubs are busy and we're struggling. We reckoned if we are in trouble pretty much everyone else must be too.

How to find a tied pub? Think about the pubs in your area and how they look - which ones look like they need investment. Every run down pub we went into was tied. Every one of the licensees was angry and pissed off, some were scared and felt isolated. All said they could see no way out. One said they had never been more than three weeks away from bankruptcy. That one has an economics degree and worked in busy bars and restaurants for years before getting into 'the low cost entry' of the tied pub trade.

We found a couple of tied pubs that outwardly had the hallmarks of freedom: they were brand spanking new businesses, heavily invested in and expensively refurbished. One has since gone into administration, another says they are in trouble, one sold the lease before the first rent review and the incomers are struggling. I've met two tied lessees in twenty years who have no complaints about the tie, other than their beer gps are rubbish. But they both have 700 barrel plus pubs and sell lots of wines, spirits and food as well. They are cash rich if not making the returns they really ought to. Neither has had a rent review. I know three multiple operators who have only tied pubs, one large scale. None are doing well "it's impossible to make a profit out of these places unless they are massively overtrading" said one, since sold and moved into the free sector. But they were able to make the shift because have the kind of big corporate backing very few people have behind them.

A vat officer I got to know conversationally said HMRC deals with large numbers of tied pub failures. He said he couldn't comment officially but the anecdotal evidence from his experience is that far more tied pubs than freehouses are in trouble.

This is a long way of saying yes. It looks like most pubs are insolvent. But then, ironically, so are the pubcos but they get away with it by juggling beans and people's lives.

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