Monday, January 21, 2013

The End Of The Line ... before the end of the tie?

This post is from a fellow publican who asked me to publish.   Apart from stressing that their story is distressingly familiar because thousands of tied pubco lessees find themselves in the situation of being squeezed between high rents and scandalously high 'wholesale' supply prices that make it impossible earn a living and to their being reliant on family tax credits just to survive while often working as much as 100 hours a week; it needs no further introduction:

"Here is the finished article, do with it as you wish mate (please do not name me yet) as to be honest have had enough, the fight has been knocked out of us and have lost the love for it.

Where to start?

We are a 100% tied pub with one of the major Pubco’s. We have been in this pub for 2 years having brought an assigned lease, with seven years of it still to run.

I was brought up in the trade and at eighteen was a relief manager for a major brewery company. At the age of twenty one I took a different career course and joined the forces. After twelve years in the forces I started to think about what I would do when I eventually decided to leave. I decided to go on a licensed trade course. I passed the course and over the next ten years I volunteered to look after military bars, to keep up with new legislation and also to make sure that I knew exactly how everything worked. At the end of my military career I did the same course I had done ten years beforehand (I was the first ever person to take the course as a refresher).

We had decided that we would enter the pub world three years before my discharge date, and spent this time visiting potential pubs from as far a field as Cornwall to York. We had interviews with numerous breweries and Pubco’s and were accepted by them all, at the time I thought great they love us, now I think they all thought 'Here’s another one'.

We thought long and hard about the lease over tenancy argument but in the end decided to accept the deal we are on (bad mistake number one). We were shown figures but not everything was detailed. In ways we are very lucky, a small pub and the rates are very good. The rent is not so good. Our accountant thinks we are paying about 30% too much. We argued that at our rent review and in the end the rent was put up by only the RPI, after a 10K investment (if you add that up with what we are paying it equates to us paying for the investment). Forget the fact that we could have got the work done for at least half that amount! - and the finish would have been better.

The pub has got sub standard three bedroom accommodation, we had to completely gut and redecorate it and are still having problems with damp and boiler issues. We had to fit a fire door as there was not one. I feel that on the whole I can live with the rent if we were allowed more leverage on other matters.

As I said we are 100% tied on all products and also Fruit Machines. We have never and would never buy out of tie, but one thing that really got me was that we were tricked into buying SIBA local ale. 'Fantastic I thought'. 'Get a real ale in from our area' (in fact three miles down the road). The customers loved it and I loved selling it! Even if it was costing me a arm and a leg, difficult to take, especially when we could buy it direct from the brewer for 40% less! I then found out it would not show up on my beer volume figures (which would affect the price we could get for the pub if we sold it). At the same time I also found out that I could buy a brand leading real ale for less than one of its own tenants could buy it.

I had a meeting with our BDM last week and he basically stated that we should have let the previous lease holders go bust before taking this place on, as we could have gone for their BOGOF deal on real ales. This might sound silly but I have four real ale lines and if two of them had been free of tie for our two years, we would be very comfortable. As it is we are here, but for how much longer? I dare not guess, as every single penny counts and one bad week will send us out of business.

I have even asked to go free of tie on the fruit machine as that would be enough for us to survive on (we are talking no more than £200 per month). I am working 110 hours a week, the first year we broke even; last year we had a very small loss.

Last year, even with the Olympics, was terrible for us. The weather hit us hard but what hit us harder was the building and equipment started to fall apart and fail. We have had to replace major equipment and now are looking at having to replace windows and a patio door. That might not sound much but it will be at least six thousand pounds maybe a lot more. We are responsible for all repairs to the building. The Patio doors have rotted away due to a burst water pipe (that had been leaking for an estimated eight years!). The Pubco accepted the liability and repaired the leak but will not accept the damage it caused, not just to the door but the ruined carpet as well.

Our Pubco refer to us as partners. Well from where I am standing, I am a slave! I worry each week that the direct debit will be paid, then worry about the tax man. I refuse to trade at a loss, but have not taken a penny from the business in the last year! So talk about us being on thousands per year makes me sick. (Pubco's push around £45K as being the amount their lessees earn from their pubs; Ed)

If just one line was free of tie that would mean the world to us and would allow this place to stay a hub of the community, a pub that has raised over eight thousand pounds for local charities in the last few years, a pub that refuses to lie down and give up, a pub that is a community asset, a pub that just would like a fair share of the profits. I do not expect to make millions but a honest wage would be good.

I fear that any (government Ed) action taken now has come too late for us, but plead with you to help others in our position."

I have been in this situation. It is grim. There is no way out other than down. It is bonded labour.; Modern Servitude no less.   It is wrong, and all of this to pay executives £million pay packages and to service mountains of debt the tenants had NOTHING to do with raising.   It's as bad as the baddest of the criminal banking fraternity.

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