It's refreshing to see the topic of the pub sector getting into the popular press as, it seems more often than not, journalists and
editorial desks shy away from trying to get to the bottom of the
dreadful, labyrinthine mess the pub industry has got itself into.
But what is clear here, by omission, is that the research sourced for
this article was fed more by the hand of the British Beer and Pub
Association giving out the standard pubco propaganda catalogue of
plausible myths which explain away the deep problems of the sector as
being caused by myriad external forces of the pubco apocalypse:
taxes, smoking ban, recession, changing habits, supermarket booze and
lure of the telly.
These of course all play a part in the catastrophic collapse of the pub sector we are witnessing but if more information had come from the other side of the bar – the side where pints are poured and the punters get served from – the article might have been less apparently balanced and pointed the finger where it really should: squarely at the industry's boardrooms, whose appalling mismanagement of the pub industry has brought Britain's most iconic, culturally significant, economically flexible and socially essential network of small businesses to its knees. The finger's aimed at the Great British Pubco's and they've nowhere to hide.
It sounds blunt but it's true: the pub sector has been in the hands of spivs and bandits who, in just twenty five years since the beer orders of 1989, have quietly, cynically and systemically manipulated the construct of the tied lease, a completely anachronistic form of free market protectionism, to blatantly asset strip the nation's pub stock from right under the British public's nose and get away with it.
These of course all play a part in the catastrophic collapse of the pub sector we are witnessing but if more information had come from the other side of the bar – the side where pints are poured and the punters get served from – the article might have been less apparently balanced and pointed the finger where it really should: squarely at the industry's boardrooms, whose appalling mismanagement of the pub industry has brought Britain's most iconic, culturally significant, economically flexible and socially essential network of small businesses to its knees. The finger's aimed at the Great British Pubco's and they've nowhere to hide.
It sounds blunt but it's true: the pub sector has been in the hands of spivs and bandits who, in just twenty five years since the beer orders of 1989, have quietly, cynically and systemically manipulated the construct of the tied lease, a completely anachronistic form of free market protectionism, to blatantly asset strip the nation's pub stock from right under the British public's nose and get away with it.
It
really is a case of the Emperor's new clothes. Pubco's charge
excessive rent for chronically run down pubs then deliver beer and
other supplies to them, routinely charging as much as double the
open market price... yet pubco's say they invest in their pubs and
support their tenants. They do not. And therein is the lie; pubco's
do not do what they say they do. It's not rocket science to figure
out: You just have to look at the state of the nation's pubs to see
this is what is really happening. Our pubs are falling apart dumps
that sell beer at ludicrous prices. It's no wonder customers leave
in droves; who wants to sit in a run down boozer being ripped off
when there's so much better value everywhere else out there in the
real world that's free of ties? Stupidly expensive posh pubs seem
good value by comparison. Those pubs are the ones that have been
invested in, had millions spent on training, brands and product
development, offer and polish. They tend, not coincidentally, to be
owned by the managed arms of pubco's who know which side their bread
is buttered on... They are all getting out of tenanted pubs and
investing in managed chains – this side of the sector is surging
ahead, expanding and making solid returns – apparently immune to
all those awful inexorable troubles in the economy that explain the
failure of the rest.
The figures for pub closures quoted clearly came from the pubco side of the bar because they are wrong, as the first commenter points out. Far more tied pubs close than free of tie – the figures given out to public consumption are manipulated by the industry to show the contrary and 'proves' the beer tie 'protects' pubs and their publicans from the ravages of the free market – this is palpable nonsense when you know just how much tied pubs are really being fleeced for.
The figures for pub closures quoted clearly came from the pubco side of the bar because they are wrong, as the first commenter points out. Far more tied pubs close than free of tie – the figures given out to public consumption are manipulated by the industry to show the contrary and 'proves' the beer tie 'protects' pubs and their publicans from the ravages of the free market – this is palpable nonsense when you know just how much tied pubs are really being fleeced for.
The
mechanism by which most investment comes into the tied pub sector is
called 'churn'. This process sees a pub trading for decades under
successive tenants each running serially failing businesses out of
the one pub. By far the majority of tied pubco publicans – as the
article shows in the earnings figures - don't make enough profit to
be able to invest in their businesses, their pubs become run down,
they fail, they leave the pub. Every time one tenant's business
fails the pub is marketed by the pubco as an attractive 'low cost
entry' into the pub sector, an opportunity to set up a new business,
move home and build up value. One failed tenant is replaced by a
tenant intent on turning the business round but, as the term 'low
cost entry' implies, rarely do tenants invest enough in the property
(nor do the pubco's encourage them because that would put them off)
to adequately make up for the decades of underinvestment it's already
suffered or to radically transform performance of the business.
Investment by new tenants does slow the inexorable cycle of decline
in the pub's viability; curious, hopeful customers come back for a
while, the tenants don't make enough profit, the pub gets run down,
customers leave again, pub is re-marketed and churned again until the
point at which pubco assesses that no one would ever be foolish
enough to try to revive its fortunes at which point pub closes, pubco
puts pub on market Freehold free of tie 'may be suitable for
alternative use'. There are many ways in which this destructive
churn profits the pubco's financially while decimating their estates.
That
pubco's are asset stripping is so incredibly blatant it's often
impossible for decent people to get their head round it. Bemused
observers who can't accept the obvious ask: 'This just doesn't make
sense. Why would pubco's actively seek to put tenants out of
business? It's not a sustainable business model, no company would do
that”.
Well
they do.
And
this is the point: this business model is NOT sustainable and the
pubco's know it. They don't care anyway but there's nothing they can
do about it even if they did. Debt was not mentioned in the article
yet is the fundamental problem underlying pub closures in the tied
pub sector. It's likely that the BBPA or Ted Tuppen didn't bother to
mention debt. Pubco's debts are gargantuan. Unsustainable
£billions. The debts are so huge that interest payments alone
consume all available cashflow. Pubco's cannot rebalance the level
of risk and reward with tenants because if they do they will default.
Pubco's,
and the BBPA, blame anything and everything, other than the fact
their rents are too high and their supply prices extortionate, to
explain why their pubs are failing in droves... THEY, the pubco's,
are the ones who are lying. The individual tied publicans, publican
led campaign groups, consumer groups, small business organisations
and the unions who make up Fair Deal For Your Local campaign have not
been lying – they don't need to anyway because it seems no one
believes them. Everyone who's anyone apparently prefers the lies and
the b'shit to the truth when it comes to pubs. It's a tragedy that
so many people have been taken in by the biggest scam in British
history, one that's stripping the nation of its traditions, its
cultural heritage, sense of place and is damaging communities
everywhere.
It's disgraceful. It's a cultural crime.
It's disgraceful. It's a cultural crime.
No comments:
Post a Comment