I am sure regular pub visitors will have recently witnessed a rallying call by local MP’s, demanding action by the government to help stem the flow of pub closures. A call also supported by the BBPA( British Beer and Pubs Association) and the powers that be, at CAMRA HQ in St Albans.
Now, it is all very commendable by all parties concerned, outlining some of the reasons for pub closures: crippling beer duty, high business rates, VAT, the smoking ban and cheap supermarket alcohol being highlighted as major contributory factors, for the demise of the British pub.
However, why do politicians, influential pub bodies and campaigners, always appear to swerve the real ‘elephant in the room’ – the prickly and contentious issue of the Pubco tie. Surely, the flawed business model and unscrupulous antics of some of the largest companies, are a major reason for the beloved British pub having to call last orders. Agreed?
The likes of Enterprise Inns(Ei Group PLC) and Punch, embarked on a huge financial investment; borrowing enormous amounts of money to pay for 1000’s of pubs they had purchased. Problem was they were reluctant to invest in them. Especially those that had endured many years of neglect.
How are pubs expected to thrive when the tied tenant is having to pay over the odds for their beer? The pub company buys beer at a discount rate then inflates the price to the tenant by a margin of anything up to an eye-watering 100%. So, the beer is more expensive than the independently owned pubs.
The rent they pay is linked to turnover. More beer sold, more rent to pay. Hard graft and devotion to duty is not rewarded – it appears to be penalised.
Four Enterprise pubs in Norwich in just seven days have recently announced they will not be renewing their leases. Three due to steep rent increases. And the fourth saying they were denied a lease renewal. One, the Gibraltar Gardens, has closed because the tenants could not afford the 100% rent hike in January.
Is it any wonder tenancies do not last very long; resulting in more pub closures. The pubco business model clearly doesn’t work. The amount of pubs Enterprise and Punch dispose of clearly proves this. Asset stripping in order to reduce their mountainous level of debt. Flogging pubs for alternative use to supermarkets and developers.
Pubs that could have been saved. Now closed because of bad management by some pubco bosses, who clearly didn’t have much of an idea of how to run a pub. The systematic asset-stripping of communities the length and breadth of the nation.
Hopefully, the influential powers that be, mentioned at the outset of this article, appreciate and understand my concern at their reluctance to include the ‘elephant in the room’ when highlighting the major reasons for pub closures.