The British Pub industry has never experienced anything like the COVID19 pandemic. Even during the fuel strikes, foot and mouth outbreak, two world wars, three day weeks, and various other social and industrial crises that have befallen these islands over the past centuries, the boozers have always remained open for business.
The Prime Minister’s advice to “please don’t go to the pub” was followed by legislation just days later forcing pubs to close on public health grounds. These are unprecedented times. Pubs operate on low margins and trading conditions have been less than favourable for some time, with high fixed costs and an unfair tax burden relative to the off trade. The hated beer tie which impacts around half the country’s pubs continues to act as a millstone around many publicans’ necks. And now this. FORCED legal closure. We accept that the government has been forced to do this for the right reasons, and we also welcome the pragmatic set of financial measures outlined by the Chancellor to assist small businesses, including pubs. But what we must call out is the behaviour of some of the brewers and pubcos. Just under half of the nation’s pubs are owned by pubcos or breweries which operate a tied leased model. The remainder are independently owned or operated on a managed estate basis e.g. JD Wetherspoon.
For tied publicans who rent their business premises, and often their home, from a brewer or pubco, the dry rent has historically been set on the basis of fair maintainable trade (FMT). This is a highly controversial subject area and publicans have long claimed that the bulk of business risk is placed entirely on them whilst the bulk of the reward is enjoyed by their pubco or brewery. In addition to their basic rent, and the responsibility to fully maintain and insure the pub premises, tied publicans are also hit with an additional levy known as a ‘wet rent’ in which they pay around twice the open market rate for tied products e.g. draft beer, wine, soft drinks and spirits, which their lease obliges them to purchase from their landlords. Tied prices are extortionate and the range is usually limited. This partly illustrates the barriers which have prevented the Craft Beer Revolution from reaching tied pubs as the cartel of pubcos and family brewers would rather supply global brand beers to their tenants at prices they can control and at bulk discounts which they have negotiated with the global big brewers, exploiting distribution and logistics networks to which the smaller craft brewers have no access. This unfair and anti-competitive practice is part of the well documented #GreatBritishPubcoScam which has been widely written about by publicans and campaigners over the last 15 years yet sadly only rarely reaches mainstream and national press.
Pubcos are quick to describe the relationship between them and their tenants as a “business partnership”. The pubcbo’s mouthpiece, the industry body known as the BBPA (British Beer and Pub Association) frequently highlights the benefits of tied leases as a ‘low-cost entry into business’ and the wide range of industry leading support and training tenants receive from their experienced pub owning business partners. Tied publicans tell us that such support is non-existent in reality and given the substantial ingoing costs, advance rent, bond deposits, huge premiums and dilapidations levied at the start and end of any tenancy then the low-cost entry argument is also a myth.
The latest twist in the continuing Great British Pubco Scam, is that the largest pubcos continue to demand regular full rent from their tenants, even though they have no income because their businesses have been forcibly closed! In any other sector of industry, this would be quite astounding, even more so given the claimed “partnership” arrangement between the landlord and tenant. Even against the backdrop of the corruption and deceit of the tied pub model, it is indeed rank hypocrisy of the pubcos to demand rent when revenue has completely disappeared. How can any hardworking publican, on such low margins made paper thin by the cost of the tied lease, pay rental demands with no money coming into the till. Only in pubco land could this nonsensical idea ever stack up. COVID19 has served to expose the fact that big business pubcos expect support in a crisis to be provided by their small business – business partner tenants!
Our friends at the British Pub Confederation – the true independent voice for the British pub, have launched #NoPubNoRent – a campiagn to raise awareness of the plight of publicans during this crisis. The confederation has produced a graphic sorting brewers and pubcos into a hall of fame versus a hall of shame. This list is regularly updated but if you think that a company has been mis-allocated then please let us know at once. In the meantime, get behind your local pubs under forced closure and help them hold their profiteering pubco landlords to account – #NoPubNoRent!
Well done to Admiral Taverns, Hall and Woodhouse, Fullers, Wadworth’s, Adnams, Palmers Brewery, Youngs, JW Lees, Harveys, Everards, Holdens, Robinsons, Caledonian Heritable, Shepherd Neame and Joseph Holt. Thank you.