Tuesday, September 30, 2014

Rip Off Britain

Free houses charge high prices because they can. They can make a profitable business out of prices that don't look excessive in a market that is dominated by the prices tied pubs charge at the punp. By far the majority of pubs are tied to pubco's/ Their lessees are forced by circumstance to charge too much for their beer - because the wholesale price their profiteering pubco's charge is up to DOUBLE the open market price of draught beers ...

Thus the retail price of beer all over the UK is generally set by the prices that tied pubs sell their beer - the tied house wholesale supply prices are high because tied publicans set their pump price not by the gross margin they need to survive in business (usually 55% - 65% in catering) but exclusively at a level the publican thinks (hopes) they can get away with, without pissing their customers off so much that they go elsewhere...

Tied pub' gross profit margin on draught beer typically is around 35% - 40% - not enough to make the business able to cover overheads unless it is really bust and there's enough of a cash margin over the year to do better than break even.

This is why, excessive rents aside, there is so much business failure in the pub sector - the majority of pubs are tied = the majority of pubs are continually in a spiral of business failure. They only stay open between one tenants' failure and the next tenant investing in the premises as pubco's use 'Holding Companies' to trade the pubs while being marketed between tenants...

It's called the #GreatBritishPubcoScam

Thanks for listening

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