Tuesday, April 24, 2012

More for This Is Gloucestershire:

Here's a few issues in one post to help with Pertinaxx's homework:

Tied pubcos are failing because their tenants are failing. In droves. Look around you people – the evidence is impossible to hide – pubs are being boarded up everywhere. Pubcos are never going to admit they are failing – if they did the bosses would be kicked out. What pubcos are doing these days is making hay while there's still some cash coming in from their estates and all the boards of directors are doing is looking after their mortgages, their private school fees, their bonus schemes and pension packages. Their share options are worthless.

SURVEYS; So don't expect 'surveys' of tied tenants to be quoted by pubco employees as anything other than rosy. 'Surveys' of tied pub tenants will ALWAYS throw up results strongly biased in favour of the cuddly pubco. It's the way of the world and it's pretty obvious why this is the case:

1) No pubco will admit it has any responses which seriously indicate failure in the tenant/landlord relationship - that is not the pubco way.
2) When pubco tenants are 'surveyed' tenants do not tell the truth for fear of being targeted by area 'management' for not toeing the corporate line which is: The relationship is a partnership; The pubco supports the tenant through thick and thin.

The worst a tied tenant will say on record, or in a survey no matter how 'anonymous' it is, is that the relationship with the pubco could be better. Tenants fear being harassed by 'Brulines' the pubcos' beer police. They fear being kicked out of their home. They fear the bailiffs, the business rates, the vat man, the draymen, the area management. In the tied tenants' world everything is tainted by the reach of the pubco hegemony.

Ask a pubco to PROVE their assertions that lessees are happy with the tenant/landlord relationship - and you will NEVER get a response other than obfuscation. Pubcos NEVER release raw data about their estates, because there is none that shows any substantially favourable outcomes.

RENTS; There is nothing supposedly subjective about whether or not a tied pub rent is set at the right level. Tied pub rents are supposed to be set following clear rules and guidance laid out by RICS but 1) the RICS pub Trade Related Valuation Group has been dominated for decades by senior pubco employed surveyors and 2) the guidance is routinely, totally ignored by pub companies anyway. It's a double fit up. The OFFICIAL way pubcos set rent is: 1) Shrewd guess the pub's gross annual income 2) Add thirty percent for the amount of cash they assume the tenant is running off the books 3) Divide the total by 50% to give the base rent assessment 4) Add 15% for pubco staff perks 5) Drop this into an A4 P&L sheet and make figures add up to amount at 4) post to tenant 6) Wait for tenant to capitulate and if they do not 7) Calderbank at 80% of bid 7) Threaten arbitration 8) Order trebles all round

SUPPLY PRICES; The cost price of tied products is ALWAYS a 'secondary consideration' to a tied tenant because there is no possibility of the tenant buying the same for a much better price outside of their restrictive purchase agreement. The ONLY possibility of making a respectable amount of money out of a tied pub lease is by over trading the premises by at least 50% of where the pubco thinks it should be by their 'put a finger in the air method of valuation' and make a cash margin at the end of it all while always accepting that your actual 'gross profit' is embarrassingly pitiful.

Tied pubs' mark up on beer is set according to what the customers will bear paying and has nothing to do with adding the margin needed to make the business work healthily. Free of tie pubs benchmark their prices against tied pubs and can comfortably discount against them while their margins are intrinsically better because they are paying half for their beer than the price the average tied pub is charged through their pubco 'wholesale list with retail prices'.

No comments:

Post a Comment