4th July 2008
The Fair Pint campaign has responded to the claims of Simon Townsend, chief operating officer of Enterprise Inns, made to the All-Party Parliamentary Beer Group’s inquiry into the future of community pubs.
During the session, Mr Townsend claimed that he does not believe that the tie has anything to do with the difficulties faced by some pubs, because the model is able to respond to economically challenging times.
However, the way pubcos apply the model means this is not the case. Rents in this industry are meant to be calculated on the basis of profit assessment and go up and down as a consequence. However, many pubs are tied into upward only rent reviews, including those adjusted yearly by the Retail Price Index.
Mike Bell, Enterprise licensee and a leading member of Fair Pint campaign, said:
“Everybody, including the pubcos, recognise that the market is currently struggling. If the tied model is a viable model, able to respond to economic challenges, then surely my rent should be going down? Mr Townsend claims that the worst thing for his business is a closed pub. The answer is quite simple then – reduce rents to reflect the downturn in pub trade and stop making us pay twice as much for beer as it would cost if we could go directly to the brewery.”
“Mr Townsend is calling on the Government to offer rate relief to pubs who provide facilities for the community. I would welcome any form of relief, but what he is really asking is for the taxpayer to bail out the licensee so the pubco can keep rents unrealisticallyhigh.”
Simon Townsend went on to blame Enterprise tenants, saying that some licensees’ credentials may not be good enough to survive in the current market.
Mike Bell responded:
“I do not dispute that some licensees may not be be up to the job and are ill prepared for running a pub but this does not stop pubcos from advertising to potential tenants that “you don’t even need previous pub experience”. That being said, it is not just the empty pubs that are becoming increasingly unviable. My pub was recently described in the London Evening Standard as the best Enterprise pub in London, yet I cannot make a net profit on a pint of beer.”
In response to Mr Townsend’s comments that the number of Enterprise licensees who have forfeited or surrendered their pubs is not significant, Mike Bell said:
“In that case, it shouldn’t take them long to count how many have forfeited and I look forward to seeing the figures shortly!”
1. The Fair Pint campaign is a coalition of independent, tied landlords and industry experts that are seeking to highlight the plight of UK landlords and consumers who suffer as a result of ‘tied lease agreements’ to pub companies (pubcos). The campaign was launched in the Houses of Parliament in May.
2. The Business and Enterprise Select Committee have announced that they are going to investigate the activities of Pubcos. Details of their inquiry can be found on the Committee's webpage.