Thursday, March 12, 2015

Time at the bar: can Britain's pubs survive?

OK article by Elizabeth Anderson in the Telegraph, missing most of the points as usual, on 12/013/15

In an industry high on tax and short on good cheer, it's survival of the fittest for Britain's pubs.

Elizabeth, the Fat Lady is not singing for tied publicans just yet - the legislation doesn't come into effect until later this year... and until it's been given Royal Assent how it's going to affect the pub sector isn't clear.

Tulse Hill Hotel - Recent proof that success in pubs is about investment
NO publicans around the country are holding their breath for ANOTHER cut in beer duty - because the legal reality is that duty cuts impact on brewers' bottom line not on retailers and the consumer, millions of pub customers, NEVER see the price of a pint fall when duty is cut. IN FACT the most recent beer duty cut of 1p per pint arrived just before the brewers put UP the price of their beer by 5p a pint so the net effect was for the Press and Media pack to be triumphantly trumpeting the price of the nation's pints going down when actually publicans everywhere were chalking the price of a pint UP by 10p.

The reason so many pubs are failing is they have been abandoned by customers because they are not fit for purpose. They aren't relevant to the people who are on their doorstep NOT because customers don't want pubs anymore but because the pubs have become tragically run down due to chronic under-investment by their owners, tied pubco's, for twenty five years since the Beer Orders.

Essentially the majority of the British pub sector is owned by giant pubco's whose 'low cost entry business model' has comprehensively asset stripped the national pub estate, and Britain's history, traditions, cultural heritage and very Sense of Place, for the last quarter century.

The pub sector is in crisis because of gross willful neglect by companies purporting to be the custodians of our heritage, corporations run by accountants designed to return the maximum amount of profit on the least possible amount of structural investment in the pub estates they own.

Of course while the majority is in decline because of bad business there are many able exceptions to the prevailing rule of the tied pubco hegemony which states the lie, most prominently pumped out by the pubco's propaganda machine the British Beer and Pub Association BBPA that pubs are no longer economically viable because of a 'perfect storm of market conditions'; Peter Borg  Neale's right, the pub sector lacks investment - his own pub group proves (and there are significant numbers of other smaller pub companies around the UK proving the same) that pubs that are properly invested in and well run are financially successful - but the elephant in the room is still the beer tie and the pubco's and family brewers who abuse it comprehensively.

All parts of the Great British Pubco Scam which has taken 25 years to bring our pub sector to its knees. This period of unfettered free market greed (made possible, stimulated, protected and legally sanctioned by successive government's continued support of the beer tie) will be looked back on as a period of unprecedented neglect of the most iconic, socially valuable assets of Britain's cultural fabric - a period where we presided over a white collar cultural crimewave that has gripped the landscape and is leaving indelible scars that will be felt for generations to come...


  1. Comments from others

    Simon Ardron · Friends with Terry Eagle
    The beer tie has ended, Lindores can choose market rent if they wish. relevance to the customers is correct though, people are no longer going into the local, why? Often poor quality management of The pub, sometimes the pubco doesn't want the pub to stay open so they can sell it for development. The only solution is for people to use the local and stop blaming the pubco.

    J Mark Dodds
    To Simon Ardron: The tie is nowhere near ended, upcoming legislation will not come into effect for at least ten months and then its impact I'd incremental. The legislation will apply to existing tenants only, has force at rent review IF the tenant invokes it, and it's entirely unclear at the moment that they will all understand the tools of legislation are available to them. It does not apply to new tenants at all, the pubco's have been changing their contracts to get around the triggers of the legislation and wholesale abuse of tenants will continue apace as long as a cartel operating in a protected market is supported by the British Establishment.

    People aren't going to their locals where levels of comfort, amenity and service in the pubs have not been maintained to standards that meet customer expectations. Pubs that are unable to keep those standards or exceed them fail because they lose custom. Those are the pubs in pubco control where they freeholder has taken all the profit in over market rent charges and by profiteering via charging tenants up to double open market price for their supplies. This leaves the tenant doing all the work as the freeholder takes all the profit and the businesses become run down through lack of investment and the tenants financially trapped in a cycle of ever decreasing reward ending with their being as run down, depressed, overworked and distressed as their pubs.

    None of this has anything to do with 'sometimes the pubco doesn't want the pub to stay open' - pubco's want all pubs to remain open as long as they're returning substantial profit for no investment. They sweat the assets by pressurising tenants as above and when one tenant fails, as they surely will, rely on the fact that soon another tenant will take on the pub 'A Great Local Pub' as a 'Low Cost Entry' into running their own entrepreneurial business by investing in the premises their life savings, their redundancy payment, their pension fund, the proceeds from selling their home (as they are about to move into the accommodation above their own business), their vision and inspiration for a new lease of life for the business and their own skills, work time and elbow grease and so continue the pubco's taking the profit without its own investment... This cycle of CHURN, as it's called, continues, tenant after failed tenant until the pub has become so run down, so dilapidated, so unfit for purpose that no amount of misrepresentation of the conditions by the pubco can entice tenants and this is the point of signal to the pubco to sell the pub 'suitable for alternative use'. Even at this stage in the death cycle of a pub - when the freehold is being marketed many pubco's keep it on their website available to let and a sign outside advertising 'this great business opportunity'.

    It is a scam Simon. Nothing more than a scam.

    Why would anyone stop blaming the pubco when it's the pubco that is making it so? People simply are not going to use pubs that are run down, stinking old boozers that are only able to sell overpriced global brand mainstream beers due to their supply contracts because the pubco is asset stripping the business...

    It's the pubco's wot didit. They're trading Insolvently and the CEOs should be banged up for White Collar Cultural Crimes against society.

  2. Seessex Camra
    It's worrying that people think the beer tie has already ended.

    J Mark Dodds
    It certainly is worrying. Plus I've been into many tied pubs and they don't even know about the small business bill let alone clause 42 or the historic landmark vote for pubs on 18 Nov 2014.

    Reality is we have been working like slaves dedicated to getting this legislation into place a process that's so laborious and drawn out that on one side the pubco's can manoeuvre their contracts in advance of law change coming into effect and on the other thousands of Tied Publicans are so hard worked, fire fighting, keeping their businesses from going under that they never have time to surface, look around and take stock of what's happening out there. They are under constant financial pressure, harassed by pubco employees, stressed, overworked, isolated and working alone in a business environment where they believe they have nowhere to turn, with no one to advocate for them, no one they can trust with their problems and nowhere to go but down, eventually to somewhere they cannot contemplate.

  3. Craig Hudson · Friends with Seessex Camra

    I see we're here again. Whilst people talk on black and white, tennant good punch bad, the arguments lose support. "The legislation will apply to existing tenants only, has force at rent review IF the tenant invokes it, and it's entirely unclear at the moment that they will all understand the tools of legislation are available to them." Just read that back! If anyone signs a tied lease today they don't get to whine about the consequences. Ripping off the naive? Maybe, but it's not as if the info isn't out there. Would you buy a time share? Same principle. "Unclear if they understand the legislation available to them" ? Sorry ? Not only do they need protecting from their own inability to perform due diligence about an industry they're getting into but also spoon feeding the info of legislation designed specifically to help them because they're that unaware? Just how dumb are you happy to imply tied publicans are? We've been around this conversation before. I agree with most points you make J Mark Dodds but whilst your rhetoric fails to accept that personal responsibility comes into this too, it's hard to warm to your argument.

    J Mark Dodds

    To Craig: Tell me about it. Are you a tenant? Do you have experience of the beer tie? Do you know the modus operandi of pubco's? Have you spent years of your career, and life, looking into this situation?

    It IS black and white. Punch, Enterprise et al, are simply sociopathic corporates. These two are not even solvent and should be in administration so any argument supporting them at any level is irrelevant really. But.

    What I describe is the way it is and no amount of your or anyone else's splitting intellectual hairs and suggesting it's rhetoric changes the facts. The beer tie as operated by the tied lease model pubco's and the brewers who slavishly imitate them is a scam. It's POSSIBLE for the beer tie to be operated equitably and fairly but it is NOT habitually operated this way. It is used to extract all the profit out of a business, keep tenants' noses to the grindstone so they cannot advocate for themselves and mobilise to seek fairness and freedom from their position of pubco imposed penury. You might not like hearing it, you might not believe me, you might think I'm full of shit. But your might think doesn't alter the reality. I've been working in this area for twenty years and remain open minded, open to the possibility that I may be overstating the facts as I see them but I have not once in all this time, and while being pretty high profile in the anti tied pubco argument for the last decade, I have never been approached by any evidence, argument, data, facts or observation that defers substantially from what I have been promoting... And in all that time WE the anti pubco brigade have been asking for the entire pubco edifice to produce ONE Happy Tenant to substantiate the lies and bullshit the pubco's and the BPPA publish about their contracts and business behaviour, we have been banned from national pub sector publications for demanding balanced reporting, and not once has anyone come forward to argue the toss other than with statements like yours above.

  4. Continued to Craig

    There's no justification whatsoever for the existence of the beer tie, it is endemically abused and what you describe as my rhetoric is fact. The tied pub sector is a feudal backwater - the arguments are grey really, if they were black and white, the scam would be obvious and no one would be signing tied pubco leases. But the point of a scam is that is never obvious and the fact is that thousands of people still are attracted to these toxic contracts because they exist and most people do not believe that they are going to be ripped off and obviously are NOT out to assume that a big company, one among many behaving the same way, one who advertises its wares as 'great business opportunity' 'with the backing of an experienced business partner' 'with the best portfolio of pubs' 'the best product range' 'competitive discounts' 'highly trained dedicated staff' and much more - they are not expecting to be taken to the cleaners.

    The entire issue is that pubco's misrepresent the business proposition, are in control of the information and are operating a closed market and behave as a cartel. These are not matters in the public domain and the bottom line is that there should be no protected market there should beer no tie at all. The tied pub sector owns over half the pubs in Britain and is responsible for the vast majority of failure in the entire sector. It forecloses the retail market - it keeps out the 'Beer Revolution' beers - it stimulates the closure of 1,500 pubs for alternative use every year while creating bizarre conditions of demand for outlets for better beer that lead to micro pubs and 'craft brewers' setting up all over the country - only to find that they cannot sell to three quarters of the pubs in their area because they are all tied...

  5. Craig Hudson · Friends with Seessex Camra:

    I don't know how to make it clearer Mark... I agree with you about pubcos. I am not arguing with you that pubcos are bad news for all and sundry in the industry. HOWEVER. It is with comments like "it is black and white" and "have you been a tennant?" that you and others unintentionally weaken the anti pubco argument. I've never been raped. Does that mean I can't understand the pain a rape and trauma a rape victim goes through during and after? You don't need to have experienced something to understand it. You seem to think that I am arguing that you are exaggerating how bad it is to be in a tied pub situation. I am not. I believe every single thing you have said to be true. I agree with you that pubcos are solely in the business of exploiting people, and are living on borrowed time because even doing that they can't make money. They are destroying lives and pubs. "It is black and white" Really? There's no difference between a tenant that got into a lease a decade ago before it was widely publicised what the tied situation was doing to people and one who signed up last year? I think there's a vast difference. I think that for the last 8 years or so if you signed a tied lease you were dumb as arse. If you signed a lease to a company that had been discussed in the Commons and discussed all over the internet with regards to being rip off merchants... you fucked up. You bought the time share from the beach vendor; you handed your money over to the double glazing salesman who skipped the country... Yes they're barely legal crooks, but they didn't steal your wallet, you gave it to them. You were conned perhaps, but if you go into business with someone without doing a basic google search on them then it's no one else's fault but your own. If you knew all about it, but made the decision to go into it anyway because you could do better - fair play to you for going in eyes open, but YOUR gamble didn't pay off. That's YOUR issue. And that's the point your passionate argument always glosses over, and that glossing over is what alienates this CAMRA member and avid pub supporter. The strength of your argument against pubcos is weakened by not considering or addressing that simple point. In my opinion an intelligent argument against pubcos recognises the difference in tied leases by start date - those who were genuinely ripped off and couldn't have possibly known, those who weren't diligent in their own affairs, and those who were diligent but still couldn't beat the bastards. I think open recognition of that strengthens the case against pubcos rather than weakens it. When a passionate argument evades or ignores something like that it starts erring towards a rant, and that loses support where it had hoped to gain it.

  6. J Mark Dodds I'll take your point of view to the Lords and share it with the Establishment

    Craig Hudson · Friends with Seessex Camra
    Would it really kill you to admit a difference between the responsibility for a lease signed 10 years ago and one signed in 2014? You must have seen the pubcos change their marketing to prospective tenants to defend against the damning evidence out there? They can't pass it off as "one or two disgruntled ex tenants" any more so how are they doing it?

    Dorothy Webb · 2 mutual friends
    Perhaps people are duped because CAMRA are still promoting them by allowing ads in their publications, and even allowing their promotional literature to be given out at beer festivals.

    J Mark Dodds No Craig, there's been a lot of changes, Enterprise Inns particularly have altered the wording to try to remove the possibility of accusations of misrepresentation but the fact, manifestly (although I've got anecdotal evidence suggesting that as much as 30% of the national tied pub estate is under temporary management TAW at any given time) is that people are still signing up... Maybe if you've got time you might find going to one of Punch or Enterprise's 'roadshows' for a laugh... I'm going to one on Wembley next Thursday I think... They even have insolvency and debt management experts with stands at these shindig. Brilliant ruse to help keep people off their guard.

    And Dorothy has a point there too, CAMRA have got this relationship with the beguiling suits of the pubco's and - their cash for ads - very wrong, and I predict the new CEO will not wear it for long... Plus people go through life with a pervasive optimism about pubs... Great life-style and we can definitely do it better than anyone else stuff when, actually, running a pub, making it busy and getting it right and consistently profitable takes an incredibly nuanced set of skills and a lot of hard work AND substantial investment... That last bit is where the real lie hinges. There's no such thing as a low cost entry business that's going to be financially successful or sustainable long term

  7. Dawn Shanahan I bought a lease on assignment 6 years ago .I didn't know about the bad reputation the pubcos had .I was sold a business based on lies and downright deceit, I was courted , I was gullible I was naive , I willingly handed my money over , they willingly took it , it wasn't until 2 years down the line I realised I had been mis sold a business .up shit street without a paddle while they swan about in their yachts on the back of our hard graft . They are still advertising fantastic business opportunities ! ..its exactly the same as any other SCAM .only the law can stop them .. long live J Mark Dodds rant on .

    Craig Hudson · Friends with Seessex Camra
    Would you say those still signing up do so without having researched the issues, having researched by dismissed the issues themselves, or having researched things but have been convinced to ignore issues by the pubcos? (I've no intention of ever taking on a pub, tied or otherwise, but I'm keeping a close eye on the brewing end of the market, and tied pubs seem a vast source of locked out potential revenue for the independents.)

    Craig Hudson · Friends with Seessex Camra
    Dawn - did you at least google them before signing up? If you do so today the 4th response on google has the phrase "largest and most contraversial..." in the google extract and is an article about a landlady being driven under by the beer tie... If you look at the wikipedia entries for both Punch and Enterprise they talk about the 2009 Commons Enquiry. There's no doubt it's a scam, but do you agree that with all information available in seconds there's no excuse for falling for it nowdays? and it needs stopping