In praise of Ted Tuppen

It is a truth universally asserted, at least in the comments section of the Morning Advertiser, that Pubcos Are Evil, their business model consisting solely of luring the naive into their sticky webs, where, entrapped, the poor victims can be sucked dry of all their money and spat out, poorer and sadder. All their policies, the pubcos’ highly vocal opponents proclaim, from charging their tenants more for their beer than the cost of that beer to freehouses to the ways they deal with struggling publicans trying to stay afloat, are Evil, Evil, Evil. Pubcos, the antis assert, should be broken up, or at the least highly regulated, with the dreaded beer tie taken away.

Ted Tuppen as Gabbitas

Ted Tuppen creeps round the wood one way …

Now, there’s no doubt that one model, the highly leveraged pubco, turned into a slow car crash, as running up billions of pounds of debt to buy thousands of pubs and grow as big as possible turned out to be an OK plan in an economy that was doing well, but an absolutely dreadful idea in an economy that was tanking and with income from pubs  falling.

But it doesn’t need much analysis to realise that the idea that pubcos constantly, cruelly and deliberately exploit their tenants, that they maximise the tenants’ pain for their own gain, is nonsense. The best, most efficient way for a company owning pubs to make the maximum amount of money is to ensure the people running its pubs make the most money they can, too. A failing tenant is no use to any pubco – indeed, every tenancy that fails costs a pubco thousands of pounds, in lost revenue and lost rent, plus all the associated expenses of closing a pub up temporarily, finding new tenants, dealing with the fall-out and so on. Pubcos, I can tell you, because I’ve talked to them about it, invest much today into trying to attract the best possible tenants, and providing them with training and support.That’s rather more than used to happen 30-plus years ago when it was the big brewers who had all the tenancies, and too often all they wanted to see in a prospective tenant was a pulse and a deposit.

Stephen Billingham is Thring

… Stephen Billingham creeps round the other way

Yes, you can point to cases, some of them high-profile, that show pubco tenants who have put huge efforts into their pubs, and subsequently crashed and burned, with, allegedly, only hindrance from their pubco. But I’d bet on most/nearly all pub failures being down to people simply not having all the necessary talents to run a pub: as I am about to assert several more times, it doesn’t make economic sense for a pubco to do anything other than put as much effort as it can to keeping a tenant on the road and a pub open.

The claim is that the big pubcos take an unfair share of the profits made by the pubs they own, that they make “huge excess profits” by forcing “the publican and ultimately the consumer” to pay high prices for the beer they buy. But there is no evidence I know of that beer in pubco pubs is more expensive to the consumer: how could it be, for very long, when the consumer is free to go where the beer is cheapest? Nor would it make business sense to restrict the choice of beers in a pubco pub compared to free-of-tie houses, if a wider choice of beers gives freehouses a business advantage over pubco pubs, because once again pubcos would be damaging their own revenues by driving customers away through restricting beer choice. And, indeed, the evidence is that even tenants of the biggest pubcos can choose from many hundreds of different beers from several hundred different breweries. Oh, and there’s not a lot of evidence right now of “huge profits” at the pubcos, though that, of course, is down to trying to pay down the huge debts the bigger ones accumulated when they were expanding.

GAbbitas and Thring capture a new pubco tenant

A young man is captured and carried off to be a pubco tenant (with many apologies to Geoffrey Willans and Ronald Searle)

In addition, it is claimed that as well as high “wet rents”, over-the-market-price charges for beer, pubcos also charge their publicans above-market-rate “dry rents” for the pubs they let out to them. But there are two things going on here. Again, there is the nonsense that a pubco would demand from its tenants such a high return that it damages the tenant’s business. I repeat: the pubco wants the tenant to keep going. The pubco wants the tenant to succeed. The pubco is not going to act against its own interests by charging its tenants so much that they quit.

Second, the pubco looks to get a return from its asset, the pub, balancing the “wet rent” money made through imposing a beer tie (where the return, while volatile, will go up quickly if the tenant does well and sells more beer) and the “dry” rent, which is less easy to adjust quickly. Removing the “wet rent” aspect means the pubco – which is, after all, a stakeholder in the pub – loses its share of any rising success in the pub. Is that fair? You might think so. I don’t believe a pubco’s shareholders – again, stakeholders in the pub, just like the tenant – would agree. The pubco and its shareholders provide the tenant with the opportunity to increase his (or her) profits, and deserve a rising slice if those profits do increase.

The call has been made for a mandatory free-of-tie option to be offered to pubco tenants. I can tell you what will happen if that is brought in: large numbers of the best currently tenanted/leased pubs will be turned into managed houses, and those pubs not suitable for a managed operation that look as if they will not bring in an adequate return to their pubco owner as free-of-tie operations will be sold to the highest bidder – likely to be Tesco, Sainsbury’s or Morrisons.

All the above springs from my musings last week on the announcement that Ted Tuppen, chief executive of Enterprise Inns, one of the two biggest pubcos, will be retiring early next year. That went up on the Propel Info website: here it is again, below. I don’t expect anybody commenting here to agree with me in my analysis: indeed, I expect to be told, as I already have been, that I don’t know what I’m talking about. I’ve had enough people comment favourably on my analyses to think that actually, I do. You all know you’re free to add comments disagreeing.

When Ted Tuppen spoke this week at a results meeting for City analysts right after it was announced that he would be resigning as chief executive of Enterprise Inns after 23 years in charge, he joked that he felt like Sachin Tendulkar walking to the crease for the last time, “but without the talent and without the adulation”. It’s a regrettable fact that to many people, who fail to understand how the pub industry works, and what Tuppen has achieved, he is less the “little master” and more the moustachioed, top-hatted pantomine villain, cloak swirling, evicting a stream of innocent struggling publicans into the snow. Alas, the tens of thousands who have been given the opportunity, through Enterprise Inns, to achieve their ambition of running a pub, and who are happy to be doing so, are nothing like as newsworthy as one angry publican in a North London suburb with lots of media types living nearby.

It’s a too-little-recognised fact that the rise of the big pubcos was not the result of the “law of unintended consequences” it has been presented in, for example, the book “Government Intervention in the Brewing Industry”, published earlier this year. It is certainly a fact that everybody involved in the Beer Orders of 1989, which ordered the then Big Six brewers to dispose of a large swath of their pubs, never realised that they would lead to massive pubcos dominating the industry: but they should have. Indeed, the rise of large, non-brewing, pub-operating companies in Britain was predicted almost 40 years before the Beer Orders. In a display of astonishing foresight, an economic analyst called Arthur Seldon, writing in The Economist in 1950, foresaw the rise of dominant, heavily advertised national beer brands, and the eventual division of the industry, as a result, into specialist brewers who had disposed of their pubs and “chains of ‘free’ houses … selling the beer in greatest demand.”

The Beer Orders, then, applying Seldon’s analysis, merely pulled the bolts from the dam gates, releasing the long-existing economic pressures on the big brewers to sell their outlets and concentrate on brewing. In the end, it did not matter that the Beer Orders watered down the original proposals of the Mergers and Monopolies Commission, and only ordered the big brewers to sell a proportion of their tied estates: once they had to sell some of their pubs, there was little remaining economic logic in keeping any of them.

The result was that hundreds of small pub companies arose to buy the blocks of pubs the big brewers were selling off. Among them was Enterprise Inns, founded by Tuppen in 1991 with the purchase of 375 pubs from Bass. Even in 1995, when it floated on the Stock Exchange, Enterprise still controlled fewer than 500 pubs. But clever manoeuvring and a stream of takeovers of other now forgotten pub companies, such as Mayfair Taverns and Century Inns, plus purchases of blocks of pubs from the remaining holdings of the big brewers, saw Tuppen’s baby grow to 3,400 pubs by 2001, and, just three years later, to more than 8,500 pubs, with the purchase of Laurel and Unique. In 13 years, then, Tuppen had grown his company to become more than 22 times larger than when it started. That’s a very rare achievement: positively Tendulkar-like.

Of course, much of this growth was powered by some pretty considerable borrowing: at the peak, Enterprise’s level of net debt was £3.8bn, equal to more than 250% of shareholders’ funds. But – and for once this IS a good excuse – everybody else was doing it, or at least, Enterprise’s main rivals were, and it was a case of borrow to grow, or go under and be swallowed yourself. In addition, it is difficult to blame Tuppen for the exuberance – what he himself this week called “massive over-excitement” – that pushed Enterprise’s share price to a peak of 774p in 2007. Nor was he responsible for the global financial crisis, and all the other problems which hammered pub incomes, and saw that share price plummet to 32p at the start of 2009.

Earlier in the presentation to analysts, Enterprise’s chairman, Rob Walker, had declared that Tuppen’s contribution to the success of the company he founded “cannot be under-estimated”, an unconscious slip (he meant “cannot be over-estimated”). But after presiding over such huge growth, Tuppen appears to have shown himself a leader for bad times as well as good. Today, Enterprise looks like a company on its way back. It has slashed the poorest performers out of its estate, which is now down to 5,500 pubs. It is now no longer having to sell better-performing pubs in order to cut its debts, though it has reduced its debts by well over £1bn in total, and its bank overdraft is now just £41m net. It is into its second quarter of like-for-like growth in income per pub. The shares, from being as low as 27p in January 2012, are now around 150p. There have been worse times for Tuppen to announce his retirement.

Not that his achievements are likely to stop the sneerers, who seem to want to blame Tuppen for every Enterprise pub that shuts down. But one of many points that critics of the pubco model fail to grasp is that a pubco doesn’t want its tenants and lessees to fail, because every failure costs it thousands of pounds, in lost income and other expenses. Last year the average cost of a pub failure to Enterprise was £18,000 – a total of more than £5m. This year it has managed to cut that cost per failure to £14,000, and reduce the number of failures by 21%. At the same time it is investing considerable effort into trying to ensure its publicans do not fail, including setting up an “intensive care unit”, the Beacon estate, where it takes over much of the running of the pub from struggling tenants. The idea that Enterprise is simply out to screw as much money out of its publicans as it can by pushing up rents as much as possible and charging them as much as possible for their beer is one only someone who doesn’t understand how businesses operate could hold. The pubco-tenant relationship is one of balance – if Enterprise’s bosses did not understand that, the company would have disappeared many years ago.

And there we come to another point that pubco critics fail to grasp: what the pubco does for the tenant. It is still a fact that by far the cheapest route into running your own business in Britain is through a pub tenancy. It’s a route thousands of would-be entrepreneurs find extremely attractive: Enterprise is still getting 70 applicants a week from people who would like to run one of its pubs, a figure than has risen 40% from last year. That’s more than 3,500 people a year. The company could replace every one of its current publicans in 18 months. What those applicants get from Enterprise is a choice of hundreds of pubs across the country, and, if they taken up a tenancy, the considerable amounts of aid and assistance that make up the “scorfa” – the “special commercial or financial advantage” – on which the pubco tied house business model is based. To quote Simon Townsend, Enterprise Inns’ chief operating officer and CEO-designate, “it’s inconceivable that these levels of investment, resources and discretionary financial support would be available were it not for the tied pub model.”

What seems to particularly rile people who don’t understand how the business works is that the “tied house” aspect allegedly “limits the range of beers the pub can sell”, and at a higher price than those beers can be bought for in the free trade. But Enterprise offers its publicans beers from 489 brewers (that’s more brewers than even existed in the UK ten years ago) and more than 1,400 cask ales, all of which can be ordered via one phonecall and delivered on one vehicle. Some limit. At the same time, the higher price of the beer is keeping the pub rent down, and helping pay for the other benefits of being a pubco tenant, including training, support services, marketing and promotional advice, one-stop supply ordering, and deals such as free wi-fi installation, and cheaper sign-ups with Sky and other broadcast providers.

There’s a good argument for saying that if it wasn’t for the pubco model and the support it provides licensees, even more pubs would have gone under in Britain than have so far. As one of the longest-lasting and most-successful pubco chief executives, having outlasted at the wicket most or all of his rivals from the early 1990s, Ted Tuppen can walk away from the crease, pulling off his batting gloves, with plenty of satisfaction.

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77 thoughts on “In praise of Ted Tuppen

  1. Very well said – a welcome introduction of reality and common sense into the pubco debate. You are quite right about what would happen if the mandatory free-of-tie option was introduced. If pubcos are turned into pure property companies, then it strips away any remaining incentive to continue to allow pubs to operate as pubs if alternative uses are more lucrative.

    And the anti-pubco campaigners never come up with any realistic alternative ownership structure for the industry. To imagine all pubs as stand-alone free-trade operations is pie-in-the-sky, to see them as council-owned “community assets” even more so. If property owners do not stand to gain from the business success of their properties, then what is in it for them?

      • To update you on what’s going on here’s what the Select Committee think about the current situation. Some of its MP’s have sat on committee through successive governments and have read through thousands of pages of submissions from both sides. Their conclusions, always unanimous, have always been to tell the pubco’s they must change their behaviour and the balance of risk and reward between them and their tenants, with the clear threat of regulation coming in if they did not change and the promise that there would be a follow up inquiry to make sure that change had been implemented. It never has … Each successive inquiry has found that the pubco’s have not materially changed their behaviour and so each inquiry’s findings have been more damning than the previous one. This merry go round has been going on for a decade. The pubco’s have done nothing other than prevaricate and fiddle in public domain with rewriting codes of practice and obfuscating, with pubco CEO’s presenting false evidence at committee hearings and subsequently apologising to the MP’s they lied to but changing nothing. which leads us to today. Nothing has happened… So when Business Innovation and Skills say to the Select Committee – please have a look at the consultation and come back to us with a report this is what the committee has to say: NO.

        BIS Committee refuses to reopen pub companies inquiry and urges Vince Cable to get on with introducing statutory code

        On Friday the BIS Department published the responses to its consultation on a Statutory Code of Conduct for pub companies. The Department asked the Business, Innovation and Skills Committee for its views in light of the published responses.

        In a letter to the Secretary of State, Adrian Bailey MP, Chair of the BIS Committee, makes clear that the Committee will not be reopening its inquiry into pubs and urges the Government to stop delaying and bring forward a Bill.

        Commenting on the letter, Adrian Bailey MP said:

        “We gave our views in our July 2013 Report–the latest in a long series of Reports on this matter–in which we called on the Government to bring forward legislation without delay. Asking the Committee for its views on the evidence appears to be just the sort of delay we warned against.

        “It is for the Government to assess the evidence and legislate accordingly. However, despite the fact that it has had six months to consider the views of the industry, it has done neither.

        “If the Government continues to drag its feet there is a serious risk that there will be insufficient parliamentary time left to establish a Statutory Code. At the beginning of the Parliament, the Secretary of State gave us an undertaking that he would act in the interest of the pub industry. If he doesn’t do so very soon, we will end the Parliament exactly where we started. This would be an unacceptable failure. The Government must act and act now.

        –ENDS–

        NOTES FOR EDITORS:

        The Committee published its Report, Consultation on a Statutory Code for Pub Companies, on 22 July 2013: http://www.parliament.uk/business/committees/committees-a-z/commons-select/business-innovation-and-skills/news/pub-companies-report/

        FURTHER INFORMATION:

        Committee Membership is as follows:
        Chair: Mr Adrian Bailey MP (Lab) (West Bromwich West)
        Mr William Bain MP (Lab) (Glasgow North East) Mr Brian Binley MP (Con) (Northampton South)
        Paul Blomfield MP (Lab) (Sheffield Central) Katy Clark MP (Lab) (North Ayrshire and Arran)
        Mike Crockart MP (Lib Dem) (Edinburgh West) Caroline Dinenage MP (Con) (Gosport)
        Rebecca Harris MP (Con) (Castle Point) Ann McKechin MP (Lab) (Glasgow North)
        Mr Robin Walker MP (Con) (Worcester) Nadhim Zahawi MP (Con) (Stratford upon Avon)

        Media Information: David Foster fosterda@parliament.uk 020 719 7556/07917 488729
        Committee Website: http://www.parliament.uk/bis
        Specific Committee Information: biscom@parliament.uk/ 020 7219 5777/5779
        Watch committees and parliamentary debates online: http://www.parliamentlive.tv

        Publications / Reports / Reference Material: Copies of all select committee reports are available from the Parliamentary Bookshop (12 Bridge St, Westminster, 020 7219 3890) or the Stationery Office (0845 7023474). Committee reports, press releases, evidence transcripts, Bills; research papers, a directory of MPs, plus Hansard (from 8am daily) and much more, can be found on http://www.parliament.uk

        • These people do not earn their living writing for or being commissioned by or doing anything whatsoever for the pubco’s

          Not one of them has any trouble seeing through the Scam.

          Today I walked into three pubs in different parts of Northumberland and asked at each: Are you tied? The answer in each was ‘YES’ Then I asked: Are you happy with the tie? And the answer was ‘Of course Not’.

          How come people like you cannot do the same?

          • I’d expect 80 per cent of pub tenants to say the same thing. I’d expect 80 per cent of freelance journalists to say they were unhappy with the amounts of money they were offered by publishers. I’d expect 80 per cent of footballers to say they were unhappy with they amount of money they were given by their clubs. Surveys like that are meaningless, sorry.

  2. Some good points. Re the quote from Propel Info, though – it does repeat the myth that the Beer Orders compelled the big brewers to dispose of some pubs. As far as I know the Beer Orders, as enacted did no such thing. What they did do was compel those companies to free from the tie half of their pubs in excess of 2,000 (so it you owned 3,000 pubs you’d have to free 500 from the tie). Of course the big brewers chose to sell to pub companies with sweetheart supply deals on the side (thus attempting to preserve the status quo) but they didn’t have to do this – in fact I seem to recall that Scottish & Newcastle initially retained their pubs and went for the free of tie option.

    • Didn’t S&N (and their successors) in fact continue to retain a tied estate of under 2,000 pubs – what is now the Heineken-owned Star Pub Company?

    • You’re right, of course – but S&N was the least badly affected and would have had to release from the tie only 177 pubs, according to Government Intervention in the Brewing Industry, while the others would have had to release an average of more than 2,000 pubs each from the tie. There was little economic point in owning all those pubs if you couldn’t force them to sell your own beer, so it was a de facto forced disposal, if not a de jure one.

  3. In your defence of the pubco, what about the aspect of short-term vs long-term income? Most of us have seen what appears to be a pubco deliberately running a pub down in order to realise a short-term gain from selling the property to a builder or supermarket; we presume this is because its debts make it prioritise this over long-term income.

    Obviously once they’ve closed and sold off enough pubs to cut their debt, there’s an opportunity to refocus on long-term income. But really, is this a socially useful business model? I certainly don’t think anyone should be praised for the greedy short-termism of growing a company via a huge and unsustainable debt pile, mainly so they can pocket bonuses along the way then jump ship before it hits the rocks.

    You’re right about the danger of turning them into pure property companies though – unless of course strong planning controls are put in place to better control change-of-use. And I can’t see that happening under the current government.

  4. A failing tenant is better if the property is worth more as a property asset for alternate use. Not only is your property soon vacated but you have plenty of evidence that the business in its current form is unviable. Handy if faced with annoying types that want to protect pubs. A failing tenant can be of more use to a property company saddled with pubs worth more as development land.

    If the property is best valued as a pub, then yes, a tenant or licensee making a go of the business is more valuable in the longer term.

    Further, I faced with a short term cash requirement, then the longer term does not exist, or will not exist if the short term cash requirement is not met. Therefore it is also logical to sacrifice a long term prospect in order to meet a short term emergency requirement. So it becomes logical in some circumstances to squeeze tenants at the expense of longer term viability, even if it appears counterproductive to longer term aims. Today’s problem is finding X amount of cash, Tomorrows problem may be finding a new tenant if we squeeze but heh, that’s tomorrows problem and tomorrow will not come unless we generate the cash today.

    The question comes as to whether the high level of gearing has created a short term cash requirement that the business cannot meet without sharp practice. The annual accounts surprisingly suggest not. That these businesses are highly geared with a requirement to pay interest rather than choice of dividend level but the interest due is not extortionate. They haven’t been to Wonga.

    What they owe in interest is reasonably what they might be expected to be able to generate on the assets and less than they would be expected to give equity owners in dividends if they had an ungeared capital structure. In an ungeared structure they would face the same pressures to divest property as investors no more like not getting dividends as bond holders like not getting interest. A fall in share price below asset value (based on market asset value not restricted to running those assets as pubs) would make a business subject to asset stripping.

    The problem faced appears to be one of poor trading across the estate. As to whether they treat their licensees like dirt. There appears an awful lot of people moaning about PubCo’s, not a lot of people moaning about family or regional breweries and if you put your own quid in the game I very much doubt anyone commenting would be daft enough to throw his or her lot in with the likes of Enterprise or Punch.

  5. This revisionist stuff doesn’t change the facts that Tuppen has left his job having churned thousands of pub businesses and sold off thousands more by abusing what was already a many decades out of date business construct that had no place in the 20th century let alone the 21st.

  6. This is in a way very similar to what, mostly, the bigger breweries do here when they “buy” a pub. Basically, it works like this: you want to set up a pub/restaurant; you approach one of this breweries and tell them your plans. If they find you interesting they will provide you with dispensing lines, free glasses, signs and other marketing trinkets and maybe even cash so you can invest on the pub in exchange of your signing a, say, 5 contract where you undertake to buy a minimum given volume per month at an established price per half litre. Naturally, if you don’t manage to sell that much, it will be your problem because you will still have to buy the agreed minimum volume. This serves a double purpose, on the one hand, the brewery knows how much the will sell over a period of time, and on the other, it can make it very difficult for the pub to bring in an alternative brand.

    Big brewers are often criticised for this, with the argument that it is unfair competition. But is it so? They are after all helping a small business to get started and the owner of the pub makes his choice based on what they consider is best for their business. At the end of the day, it always comes to someone’s choice.

  7. It’s a stark fact that when a pub gets into difficulty in these parts it’s invariably a pubco owned place.In many cases the turnover simply isn’t big enough to provide both a decent living to those who run it and a slice for the pubco. One reason for the problems is that many pubcos are property people , saw things in terms of bricks and mortar and paid way, way too much for the premises. I know a small scale pub operator whose rule of thumb is that if you pay much more than one to one and a half years’ turnover then the pub will struggle to be profitable.
    As an active CAMRA member I’ve spoken to many pubco tenants and they’ve all said the same thing-you are offered a reasonable starting rent but after three years it’s reassessed and a new rent is set based on results.The harder you have worked, the more beer you’ve sold the more rent you pay.In many cases they’ve either walked out or struggled or go under. One was advised by the pubco representative to put his name down for a council house if the rent was too much for him to pay.Another was running a thriving pub, it buzzed every night and sold masses of beer, wines and spirits from the pubco.He had the rent review, calculated what it would mean to his income and left.Since then there has been a succession of short lived tenancies all of course on low introductory rents and sales have been tiny.It illustrates perfectly the statement I made at the beginning, that many pubcos are just property people.

    • “In many cases the turnover simply isn’t big enough to provide both a decent living to those who run it and a slice for the pubco.”

      If that is the case, then I would imagine the turnover isn’t big enough to provide both a decent living to a free house landlord and pay a substantial rent to the property owner either.

      Its not necessarily the pubco model that is at fault in that case, its simply that for a pub to be genuinely financially viable in an area with high property values, it needs to have a seriously big turnover. Its not a governance problem, its a market demand problem.

      • No, but there’s a big enough income to provide a good living to an owner landlord (if of course he doesn’t pay way over the odds for the premises). My point earlier is that pubcos have vastly overestimated the value of pubs as businesses and have to claw back the overpayment through rents and surcharging the supplies the tenant is obliged to buy from them.

        • Same issue still applies: an owner landlord is a mug to keep his pub open as a going concern if he could simply sell the property and make a mint.

          • And this has been happening in many rural areas where free house owners have seen their turnover decline year-on-year and concluded that they would be better off selling it for conversion to residential. use. If a pub isn’t inherently viable the ownership structure doesn’t make much difference.

    • Locally we have seen plenty of sell-offs by family brewers too – it’s not just pubcos.The fact that there are a few highly successful free houses doesn’t mean that model is suitable for every pub, and many entrants to the trade would struggle without the guidance given to them by brewers or pubcos.

      • I think though there is something of a difference between family brewers selling off no-hopers which are impossble to let, and lessees being effectively driven out by unrealistic rent reviews.

        • Then again, if a family brewer has a pub-owning arm, that’s effectively a pubco – I know of a Fullers landlord near here who was forced out by an unrealistic rent increase. Well, it was unrealistic for him. Whether the new tenants are paying the same rent I don’t know – I’d guess they are on something lower & more introductory, but as I say, that’s only a guess.

          • I see what you’re getting at but in fact most of the family brewers don’t have pub owning arms (well at the least the ones in and around Manchester don’t).

  8. I don’t live in the UK so I’ve no agenda here but I think it’s a bit naive to assume that the interests of the tenant and landlord are necessarily aligned. It is indicative that a recent article from the Financial Times starts with a quote from Stephen Billingham that: “In the past, you used to churn the tenants… If they failed, you brought in somebody new.”

    Of course, as a tenant it’s easier to pull out when the going gets tough – as you say it’s a low risk / low commitment way of going into business.

  9. Excellent piece, as ever. It is worth noting that you don’t always have to be a pub co to end up with a tied bar for instance. I have seen a practice where breweries pay for the taps, when a new bar is being installed, for dominance of only their products. I am unsure if this is legal and I find it extremely frustrating as a consumer. Essentially it is a bribe for guaranteed revenue. I think there needs to be a greater audit of this system and Pubcos are not always the ones at fault, loose laws and loose Governance is just as much to blame. The Pubcos are mainly exploiting the loopholes in the law. I would like to see more studies of the Pubcos compared to untied pubs, especially ones in the same area. Looking at the profit margins and the choice offerings. Do people actually want more choice or less? It is also not always clear when a brewery has a steak in a pub. Sometimes there is only one pump clip from particular brewery yet the venue is owned by that brewery.

  10. Martyn
    As you’re apparently so keen on statistics and evidence, I’d be interested to know how many Pubco lessees you interviewed before writing this article? You qoute the lessees’ opinions, so obviously you have spoken to many?

    I ask because your article has the whiff of one written after speaking only to HQ Pubco staff. I really hope I am wrong. I will gladly speak to you to correct a few of your mistakes, and please be assured you HAVE made some mistakes. And I say this as a FOT lessee about to leave his pub who blames many things other than his PubCo.

    I just get sick of people commenting on the whole Pubco argument with assumed authority who have probably never lived even 5 minutes in the shoes of a publican In the last 5 years (a time of unprecedented change in our industry)…

    • I will gladly speak to you to correct a few of your mistakes, and please be assured you HAVE made some mistakes

      Always happy to have my errors corrected – what are they, then?

      I just get sick of people commenting on the whole Pubco argument with assumed authority who have probably never lived even 5 minutes in the shoes of a publican In the last 5 years

      It’s extremely arrogant of you to think that only publicans can comment on the pubco/tenant relationship. All I am trying to point out is that much of what is alleged about pubcos’ supposed policies towards tenants would, if true, suggest that pubcos are run by complete idiots. You may believe that to be, indeed, true. I find the suggestion far-fetched.

      • Firstly, on the arrogance, I never said only publicans can comment, as that would be ridiculous. I said “have never lived even in 5 minutes in the shoes of a publican”. IE. haven’t seen anything from the publican’s point of view. Your whole opinion piece suggests very strongly that you have had very little, if any, contact with publicans (other than maybe some vocal posts on social media) but have had lots of contact with PubCo staff, as most of your article could be taken verbatim from the mouth of Ted himself?

        Wrong. Never spoke to any pubco staff before writing piece. MC

        Of course, I could be wrong, I only have your article to go on, so maybe you could answer my original question: just how many Pubco lessees did you interview before writing this article? I, for one, would not write such a strong public opinion piece if I hadn’t at least interviewed half a dozen each of:
        1) Pubco staff in various positions
        2) ‘Happy’ Pubco licensees
        3) ‘Unhappy’ (or ex) Pubco licensees

        It’s a polemical opinion piece, not an investigation. What is being presented is what I believe makes sense, from my knowledge of how the trade works over more than two decades of covering it and observing it. I’m still waiting for someone to say: “Here are the facts that show your opinion is wrong.” MC

        As far as where you’re wrong…

        * You say: “But it doesn’t need much analysis to realise that the idea that pubcos constantly, cruelly and deliberately exploit their tenants, that they maximise the tenants’ pain for their own gain, is nonsense. The best, most efficient way for a company owning pubs to make the maximum amount of money is to ensure the people running its pubs make the most money they can, too”

        Yes, it sounds like nonsense, but it actually isn’t. You see, for the Pubco to ensure that their tenants make the most money too would involve them lowering their current earnings for each typical pub, because they ALREADY (and have done for a long time) take too much of the profit share. Proof please – studies showing what “too much” means, and how much pubcos actually take – MC I was held up as a way-above-average licensee for the first 4 of my 6 years at my pub (the BDMs words, not mine) but I NEVER achieved the FMT figure on which they based their rent? NEVER. And FMT is supposed to be based on a ‘reasonable’ operator is it not? If you don’t believe me, ask your friends at any Pubco how many of their licensees achieve or exceed the FMT figure? I’ve asked many times and have never received an answer. By the way, THEN ask each licensee themselves, because being a competent reporter you’ll obviously want to have your facts verified. There’s a lot of anecdotal claims about fair maintainable targets and their relationship with reality, but little actualy facts. I’m not the Morning Advertiser – I don’t have the time or resources to investigate the claims. Phil Dixon has given some evidence in the past. If there are figures about, let’s see them MC

        * You say: “A failing tenant is no use to any pubco – indeed, every tenancy that fails costs a pubco thousands of pounds, in lost revenue and lost rent, plus all the associated expenses of closing a pub up temporarily, finding new tenants, dealing with the fall-out and so on”.

        Actually Martyn, it doesn’t. It invariably costs the outgoing licensee most of those things. Of course, the Pubco will quote the lost rent and costs of temp. management, etc. but do they also tell you about how many licensee deposits they keep? How much they earn from exaggerated dilapidations reports (where exactly DOES that money go, because it’s rarely spent on improvements before the new lessee comes in)? How much they get from fines once the licensee starts to struggle? How much more they can earn by duping the next lessee with an even worse deal, hidden by some temporary sweeteners? Dig a little deeper behind the figures Martyn and you might be surprised. I’m saying ‘the claims don’t make sense.’ You’re saying ‘but they’re true.’ With respect, it’s up to you to provide the facts to back the claims. MC

        * You say: “Pubcos, I can tell you, because I’ve talked to them about it, invest much today into trying to attract the best possible tenants, and providing them with training and support”

        Have you asked any tenants about this Martyn? Other than the obligatory introductory training session (that the tenant usually has to pay for), ask any tenant what he *actually* receives by way of training and support. Go on, I dare you. But, as you suggest, don’t focus on the high profile cases on either side of the argument (the ultra-successful multiple operators who can demand the best contracts or the vocal failure who may just have caused their own demise through bad management), ask a wide spread of lessees across the estate, chosen at random. Once again, if you’re saying the pubcos are lying to me, provide me with the stats to prove it. Otherwise, it continues to be your word against theirs. MC

        * You say: “…But I’d bet on most/nearly all pub failures being down to people simply not having all the necessary talents to run a pub: as I am about to assert several more times, it doesn’t make economic sense for a pubco to do anything other than put as much effort as it can to keeping a tenant on the road and a pub open”.

        Again, you’re basing on your argument on what SOUNDS sensible rather than what actually happens. I’m a good pub operator. My first 4 year’s figures proved that (I doubled the turnover in the first year) and my BDM also told me more than once that he wished he had more lessees like me. But when the bad times come, that’s when you realise your Pubco actually isn’t interested in helping much, precisely because they CAN gain more by having a change of lessee. Once again, proof, please, or it’s your word against theirs MC Now whether that’s down to naivety or deliberate planning is far too complicated to go into here, but I can certainly have a long chat to you over a pint or two about it. But let’s be clear, I don’t really blame my Pubco for the decline of my profits, all I blame them for is a total refusal to accept that anything had changed and, in the end, forcing my hand into a decision I may not have made had they actually cared as much as they pretend to.

        * You say: “…But there is no evidence I know of that beer in pubco pubs is more expensive to the consumer: how could it be, for very long, when the consumer is free to go where the beer is cheapest”?

        That’s not because all pubs have similar conditions, it’s because Pubco lessees KNOW the consumer won’t accept much of a price difference, so they take the hit on their profits to keep prices to a minimum. It’s why Pubcos CAN get away with such inflated prices to their tied tenants (and I’m not tied by the way). We still have this problem that economics dictates that pubcos are acting against their own interests by putting too much pressure on their tenants. I say they can’t be so stupid as to do that, you say they are and do. I still want to see proper figures that show pubcos’ priceing policies, taking into account everything else, actually hamper the viability of their own pubs.MC

        * You say: “Nor would it make business sense to restrict the choice of beers in a pubco pub compared to free-of-tie houses. And, indeed, the evidence is that even tenants of the biggest pubcos can choose from many hundreds of different beers from several hundred different breweries”

        Evidence from where Martyn? I suspect you’ve done nothing more than flicked through a Pubco product list whilst waiting in their reception for your next meeting? Please don’t fantasise, Steve, it’s insulting. MC How many of the vast number of local brewers are on their list (and at an affordable price)? How many of the vast numbers of craft brewers? How many of the almost unlimited world beers? Enterprise says it makes available 1,400 cask beers from 480+ brewers. DO you have hard evidence that this is, in fact, a lie? MC The tied system could work, it simply doesn’t because the Pubcos got too greedy with it. Again, go and ask some tied licensees why they stock what they do, you might get a surprise.

        * You say: “In addition, it is claimed that as well as high “wet rents”, over-the-market-price charges for beer, pubcos also charge their publicans above-market-rate “dry rents” for the pubs they let out to them. But there are two things going on here. Again, there is the nonsense that a pubco would demand from its tenants such a high return that it damages the tenant’s business. I repeat: the pubco wants the tenant to keep going. The pubco wants the tenant to succeed. The pubco is not going to act against its own interests by charging its tenants so much that they quit”

        But they do! That’s the problem with your opinion, it’s wrong! Once again, facts and figures to back up your case, please. You can’t just shout “your opinion’s wrong!” without giving some figures to prove this, or it continues to be simply your word against theirs. MC What would you say is a reasonable or realistic mark up for a tied product? You see, if I were running a Pubco I’d take exactly your view. In fact, I’d charge my lessees close to the open market price and make my profit from the vast savings I can make as a bulk buyer. But let’s assume you don’t do that, what would a fair mark-up be in today’s highly competitive a price-sensitive market? 10%? 20%? Would you be surprised that it’s regularly over 50%, and often well over? Prove it. Please. And at the same time state what each example tenant is paying in “dry” rent and how that compares to a fair market rent. MC

        * You say: “Second, the pubco looks to get a return from its asset, the pub, balancing the “wet rent” money made through imposing a beer tie (where the return, while volatile, will go up quickly if the tenant does well and sells more beer) and the “dry” rent, which is less easy to adjust quickly. Removing the “wet rent” aspect means the pubco – which is, after all, a stakeholder in the pub – loses its share of any rising success in the pub. Is that fair? You might think so. I don’t believe a pubco’s shareholders – again, stakeholders in the pub, just like the tenant – would agree. The pubco and its shareholders provide the tenant with the opportunity to increase his (or her) profits, and deserve a rising slice if those profits do increase”
        .
        Again, that’s how you’d expect it to work and I agree with you. But you can’t eat your cake and have it in reality I’m afraid. As a property owner you have to decide if you want to make your money on the asset alone (a fixed rent) or if you want to take a stake and an active interest in the business occupying that asset. Unfortunately, Pubcos want to take a stake in the business but with zero risk when it fluctuates, pushing ALL of the risk onto the tenant (upward-only rents, the elusive FMT calculations, and many other tricks I could fill you in on). They hardly have “zero risk” – if they had zero risk, they wouldn’t have to employ expensive teams of BDMS, whose role is precisely to manage the risk of the tenant going belly-up. MC.

        * You say: “The call has been made for a mandatory free-of-tie option to be offered to pubco tenants. I can tell you what will happen if that is brought in: large numbers of the best currently tenanted/leased pubs will be turned into managed houses, and those pubs not suitable for a managed operation that look as if they will not bring in an adequate return to their pubco owner as free-of-tie operations will be sold to the highest bidder – likely to be Tesco, Sainsbury’s or Morrisons”

        Hmm, interesting one. I broadly agree, BUT surely if the Pubcos are currently operating a fair system then moving to a free-of-tie option shouldn’t cause too much worry. They’re not making big profits on wet-rents after all if that’s the case, why are you complaining about high mark-ups? MC and their dry rents are surely based on real calculations, so it should be easy to convert one to the other? If it isn’t then you need to ask yourself why. The “wet rent” is the economic justification for the pubco model: if the system works properly, it enables a pubco to benefit from the economic success of a thriving tenant much faster, and ideally to a greater extent, than a reliance on pure “dry rent” will. A great tenant can and should “super-trade”, producing more economic surplus from a site thasn other users typically would, some of which surplus can go to the pubco in the form of wet rent as its reward for giving the tenant the economic opportunity to trade. The free-of-tie model removes that possibility. If I were a pubco, I’d want to stick with a model that offered me an opportunity for the greatest long-term returns: the wet/dry mix. MC

        Give me a call Martyn, I could have a chat with you, then maybe you can see that not all opponents to the current Pubco system are militants or idiots. Very happy to meet. Certainly don’t think you’re an idiot. MC

        • Martyn, I would gladly reply to all of your points again in a similar manner but I fear it would start to get far too unweildy, as I don’t have the admin controls on this page that you enjoy, so I’ll stick to a single reply. The fact that most of your responses say nothing more than “show me the evidence” should make it a tad easier this time!

          Firstly though, it is a very curious stance that you take? You can seemingly present your opinion as fact with no evidence or statistics whatsoever, and as good as admitting you have done no research to back it up, even though your position as an industry reporter must surely oblige you of such? But when I offer my opinions of why you may be wrong, not as an industry observer I might add but as someone who actually deals with a pubco for the operation of his business and talks to many other people regularly dealing with pubcos, I must present you with a flood of statistics and ‘evidence’? It’s very curious indeed.

          It may be a “polemical opinion piece” rather than an investigation but we’re not talking about the opinion of some Daily-Sport-toting bar fly, it’s the opinion of somebody whose very position as a leading journalist and commentator on the industry would have most people believe it IS backed up by thorough investigation. That’s the reason I first replied when it came through on the Propel ‘Friday Opinion’ email, because I couldn’t believe such a strong opinion on such an emotive area was being aired without any investigation. So, with respect, all else being equal I would argue that the scales holding the burden of evidence required to back up any opinions are tipped slightly against you.

          However, I will gladly offer evidence but a public blog forum is hardly the place (more for sheer content space than any worries about being in the public domain). You have my contact details.

          You say that your opinion is based on “what you believe makes sense” from “…somebody who has reported on the industry for 20+ years”. I’ve worked IN the industry for 30 years. I was at Whitbread when the beer orders were much discussed. I’ve even worked for Brulines. I totally agree with you on what ‘makes sense’ because the truth is so contrary to what we’d perceive as common business sense. That’s why licencees have such a hard time convincing ‘outsiders’ of what it’s really like and, much more importantly, it’s why intelligent or savvy people are still, even now, signing up for leases and losing their life’s savings. The licensees you so smugly put down in your opinion are often in a situation akin to the falsely imprisoned asylum inmate screaming “I’m not mad” at the visiting party, only to see any protestations swept aside by nothing more than the doctor’s wry smile and ephemeral wink; and the more they protest, the more the onlooker’s beliefs drift away from the truth.

          Do Enterprise “make available” 1400 ales from +480 brewers? I don’t know, probably? But what about the other +1500 brewers? And ‘available’ is not the same as ‘achievable’. I have available to me at any time all of the Fabergé Eggs on the market but that doesn’t make the slightest difference to the size of my Fabergé Egg collection.*

          You only think that Pubcos are acting against their own interests (and basic economic principles) because, to be frank, you obviously don’t understand the real system. You believe, quite reasonably, that the pub is the Pubco’s main concern, and that’s where your thinking becomes detached from the economics of what’s actually happening. Again, much easier to discuss off here but, in very quick summary: the Pubco is a property company, not a pub company. Look at the economics of it all through that perspective and then what you’re arguing against starts to make much more sense.

          But if you want some basic statistics to get you started, on my own situation, which is certainly not atypical:

          My Pubco earns over £70k/year from my pub (remember I’m FOT, this is just rent and machines income), year in/year out, regardless of industry or market conditions. I estimate that, in 6 years, they’ve directly spent around £25K (one outside decs and various minor structural repairs). I’d estimate a BDM earns around £40K and looks after an average of 50 pubs? So that’s a cost of approx. £1K/year including their total benefits (not quite the substantial cost you would believe). So that’s direct annual earnings of +£70K and direct costs of around £5K.
          In my best year I earned around £65K but I spent £30K that year on the improvements and equipment needed to bring in the business and improve the business & building. Last year I earned £12K (actually less once accountancy top-slicing is considered). This year is estimated at a £20K loss, hence why I’m leaving. You can view my accounts if you’re suitably bored.

          If it were a pub company then where is the assistance with the ‘pub’? What actually happens is this Martyn (spoken generically of course): if the going is good they work out the rent on actual figures, add a bit because they know they can (FMT), pat you on the back and leave you to it; if trading declines then they ignore any actual figures (because that’s always the licences fault isn’t it), revert to BBPA averages (the membership of which is, erm, Pubcos) and do everything they can to maintain the FMT. The FMT figure quoted to me this year was exactly the same as that quoted in 2007. EXACTLY. With all that has happened since 2007, and my High St position (it’s no secret how High Streets are performing), and the fact the calculations used were totally different, they manage to come up with a FMT figure that exactly matches their current rent of 6 years? Doesn’t that spark any curiosity?

          In closing, I fear you completely missed the sarcasm in my penultimate paragraph, so I apologise it wasn’t clearer. But I couldn’t have made the point in that paragraph any clearer than you did: “if the system works properly…”. Quite. Sadly, it doesn’t…

          *I don’t own any Fabergé Eggs, just in case you missed that one!

  11. Oh Dear Martyn The Zynthophile. You are a bit behind the media times in what you are saying! Other beer bloggers have changed their opinions! You need to catch up with all the latest and newest evidence of the truth my friend. Would you like to talk to us or do you think you should stick to writing about what you’re good at= beers? Wash your mouth out to get rid of that malty taste and refresh yourself with a mouthfeel of evidence which will have you hoppying around when you get the big story – The tied publican speaks the truth and the Pubco’s lie – you’ll see!

    • You need to catch up with all the latest and newest evidence of the truth my friend.

      The evidence appears to be that the vast majority of pubco tenants seem happy to carry on as pubco tenants, since there is no sign of them all quitting. Maybe they’re all too frightened to leave – but I find that hard to believe. If you have hard evidence otherwise, I would love to see it.

      • You really don’t know this as thoroughly as you make out Martyn. It just is not as you describe.

        Satisfaction surveys of pubco tenants are commissioned by pubco’s and always say that by far the majority of tenants are happy with their business relationship with their pubco.

        You misgauge the whole tenant pubco relationship. You must hang out with pubco reps and BBPA staff because no one who works in the pub industry thinks it’s anything like you’re describing – because they all KNOW what goes on, as do the people you hang out with but they aren’t admitting it because if they did they’d all be out of a job and a career. So they just keep on supporting the status quo, fleecing tenants, churning them through pubs until the pubs are so run down and knackered they have to be flogged off because no one would dream of renting them ever again.

        Pubco tenants ARE scared to tell it like it is. They have everything to lose, including their home, if their business goes down. They don’t tell the world their story, they keep it to themselves.

        There is no credible evidence to support any of what you’re promoting. So why do it?

        • “The situation’s just like I say it is, but everybody’s too scared to say so, so I can’t actually give you the evidence” – that’s not really a credible position. You’re trying to tell me that companies that have been going for 20 or more years are being run on blind short-termism, running down their assets and ripping off their business partners. I’m saying that seems not very believable, and all you can tell me is that I don’t understand. I’m seeing a lot of rhetoric, but only excuses for a lack of hard evidence.

          • I agree Martyn, it doesn’t seem believable that this kind of scam is going on right under the governments noses and regular journalist people like you who have no idea of the extremes of the pubco’s mafia like business practices. Just like the PPI scams and the RBS scams and the dodgy builders ripping off the old lady scams! Those that are not afraid to speak up have provided the facts and that is why there has been a government consultation for Pubco reform. If what we the ‘activists’ had to say was trivial and our evidence unfounded then you would not be writing your piece desperate to defend Tuppen. He was directly involved in covering up the seriousness of the misrepresentation made by the BDM to us.The BDM of 16 years no longer works for ETI. I Wonder why? No one else seems to be defending Tuppen. Are you his keeper? I regularly communicate with tied publicans who support the fairdealforyourlocal.com campaign but wish to remain anonymous. The ones that speak out are deemed trouble makers and as Nick Light ( ETI Director South) said troublemakers are eased out of the system! What did he mean?

      • “carry on as pubco tenants, since there is no sign of them all quitting. Maybe they’re all too frightened to leave”

        Maybe they have nowhere to go? Having ploughed every penny in keeping their businesses afloat? Just a thought…..

        • I’ve been asked for statistics but of course I don’t keep any! But as a branch we have always discussed pub matters with landlords and we have heard the same comments over and over again. People who were promised all sorts of things but found in the end that the pubco had swallowed up their savings.Many pubcos (it was always the old Scotco which was the most problematical) seemed to act as asset strippers-there are always new faces ready to “be your own boss and lease this pub” Massive rent rises after three years which meant effectively either losing money or working long hours at below the minimum wage.I don’t think I’ve ever heard a complimentary comment regarding one particular operator. As one very well informed in the business world told us-it’s legalised robbery.
          There are some fair pubcos such as Castle Rock in our area but as for some of the others……..

  12. I think I’m in general agreement with your post which brings much needed balance to the debate. The free of tie option will undoubtedly mean higher dry rents. Given the benefits to the publican of the tie (as you have explained) would many licensees actually go for it? There will also be high dry rent increases if a pub starts to do well. This is one of the other main sources of complaint against the pubcos so how will it lead to happier licensees?

    • There’s no balance out there it’s war. Much needed balance in the pubco debate would be evident at a point we are very far away from.

      There will be balance when facts are accepted as fact and not dismissed as Tenant invented fiction and pubco promulgated fiction were not accepted blindly as ‘fact’ and instead fingered for what it is: misrepresentation, lies, deceit, manipulation and abuse of the truth.

      The fact is that the pubco ‘debate’ is not a debate because by and large tenants are powerless. Their experience is either completely ignored and unheard, or dismissed as hype, exaggeration and bitterness.

      People listen to people who are on the customer side of the bar.

      The person at the forefront of characterising tenants and dismissing them outright is the man who calls MP’s who disagree with him ‘moronic’ this way has always been Ted Tuppen, and everyone listens to him because he’s so important. Ie has a wedge.

  13. On mature reflection I’m not at all convinced by this post. You make a good case for some sort of ‘wet rent’ system; if you were only arguing against those who say that the pubco estates should all go free of tie tomorrow, you’d have a very good argument. What you don’t address is the question of whether the ‘wet rent’ surcharge is or has been set too high – for the survival of potentially viable pubs or for the well-being of particular tenants.

    More broadly, you say repeatedly that the pubcos want their pubs to succeed and that it would make no economic sense for a pubco to run a viable pub into the ground. There are a number of problems with this argument. Firstly, it brackets out everything the pubcos do short of actually driving pubs to the wall. By all accounts pubco tenants work very hard for very little reward. If tenants have worked their socks off for three years, on starvation wages, at the end of which they finally have a few hundred quid left at the end of the month thanks to increased sales, I think they’re fully justified in feeling aggrieved when a rent review puts them back to square one. Secondly, you don’t seem to have any problem with un-viable pubs being pushed to the wall; if anything you seem to rather relish the idea ([Enterprise] has slashed the poorest performers out of its estate). But a pub that isn’t making ends meet could still be a valuable community asset; closing it down (or slashing it if you prefer) may make short-term economic sense, but it’s still something to be resisted. Perhaps another problem with the pubcos is being unnecessarily hasty to declare a pub unviable and get slashing.

    Thirdly, and most importantly, the “it doesn’t make economic sense” argument is answering specific statements about what is happening with a general statement of what ought to happen. Saying something doesn’t make sense isn’t the same as saying it doesn’t happen. The fact that the pubcos have the ability to reassess – & raise – the rent on a tenancy clearly creates the possibility for rent increases to be imposed which have the effect of driving a tenant out of business. This would never happen in a business run on a rational long-term basis, but it could easily happen in a business driven by short-term profit maximisation. You seem very sure that the pubcos are rational long-term planners rather than short-term profit maximisers – and, fair enough, you’re the industry reporter. But it does look as if some of the evidence is pointing the other way.

          • Martyn, you are a very strange man? I asked you to give me a call (you have my telephone number, email address and pub address) but now it seems you were waiting for somebody to furnish you with 100s of case studies?

            You write what is quite possibly the most sycophantic and sarcastic opinion piece on Tuppen and Pubcos ever written (and that’s not an opinion, it’s fairly self-evident in the article), with, at your own admission, little or no research whatsoever to back it up, and yet anyone who refutes it, even those dealing directly with Pubcos in their day to day lives, needs to provide mountains of evidence before you’ll consider their point of view as having any validity?

            You claim to be an experienced journalist but fail to grasp even the basics of where the burden of evidence might lie on somebody making such bold claims about such an important part of such a troubled industry? Especially somebody in your position, whose views may reasonably be expected to be based on a lot of research or direct experience. If I wrote an ‘opinion piece’ claiming the Earth was flat, would you expect me to back it up with evidence, even a little, or would you expect the world’s scientists to compile all of their studies across the last 300 years for you?

            You seem unable to grasp the difference between a different point of view and ‘abuse’? You state: “I’ve had a very small number of people abuse me and tell me I’m wrong”. Where has anyone abused you? Am I reading a different blog to you because I don’t see anything even remotely approaching ‘abuse’? All that your comments suggest to me is somebody who isn’t used to having his views challenged, at all? You come across more as a spoilt child than a leading journalist with comments like that. I haven’t challenged your views because I have any wish to abuse you, I challenged them because they’re wrong based on everything I have ever experienced in my 29 years in the industry. It really is that simple. It’s a bold statement to make but I’m qualified to make it because, unlike you, I DO have direct experience of dealing with Pubcos and unlike you, I HAVE spoken to many Pubco licensees.

            I’ll remind you again, I’m available any time, at any location of your choice. I can’t imagine you’ve ever had a clearer offer than that. But I also can’t imagine you ever taking me up on the offer because it risks changing your world view…

            • Obviously Martyn’s happy to engage in as much as he allows posts from people like you and me to be published on his blog, thus generating more interest in his blog but what is clear from his action regarding engagement (i.e. none) is that far from his mind being ‘entirely open’ he’s not interested in evidence and prefers to remain convinced by his own anecdotes.

            • “Where has anyone abused you?” Well, that would be writing things like “You write what is quite possibly the most sycophantic and sarcastic opinion piece on Tuppen and Pubcos ever written …”.

              “I haven’t challenged your views because I have any wish to abuse you, I challenged them because they’re wrong based on everything I have ever experienced in my 29 years in the industry. It really is that simple. It’s a bold statement to make but I’m qualified to make it because, unlike you, I DO have direct experience of dealing with Pubcos and unlike you, I HAVE spoken to many Pubco licensees.”

              I am very willing to see whatever evidence you have that supports your case. So far all you’re doing is saying “You’re wrong because I say you’re wrong.”

              • So you’d like to meet on Xmas day Martyn? Excellent. Being a licensee I have no issue working on the days when everyone else expects to be off, and this includes Xmas day. But I strongly suspect you wouldn’t turn up. It’s great to see that you take it seriously though, that comment says more about your attitude to people who are genuinely trying to debate with you than you’d likely ever appreciate.

                You say: “I am very willing to see whatever evidence you have that supports your case. So far all you’re doing is saying “You’re wrong because I say you’re wrong.””.
                Oh Martyn, the irony is almost crippling. What evidence have you provided for your public opinion piece? What on Earth makes you assume such a privileged position that you can repeatedly demand hard evidence from people trying to debate a piece that was written from nothing more than your own evidence-free opinion? I’ll do you a fair deal. every piece of evidence you give me that supports your comments, I’ll give you one back. Agreed?

                If you think anything I’ve written here is abusive Martyn then you really do have a very strange take on the word ‘abuse’. Have you EVER had a view challenged? Based on your responses to me here, I’m fairly confident that any real abuse you have faced in life is probably borne from the sheer frustration people might feel when trying to discuss something with you!

                And now onto a couple of things from your reply to J Mark, if I may jump in…

                You say: “you’re taking it as read that pubcos shouldn’t make more profit out of a pub than tenants do (Why? Where is it written that such a thing is immoral/unlawful/wrong? What’s you’re argument for saying this is wrong?)”
                Are you aware Martyn that it is the PUBCOs who say the profit should be evenly split, not the licensees? Read up on FMT (Fair Maintainable Trade). So it’s the Pubcos who are saying that making more profit is wrong. Yes, that is ironic isn’t it. The problem we have is that what they say and what they do are often two completely different things. Unfortunately, you only seem to take notice of what they say without caring much for finding out what they do, which is the whole motivation for trying to debate this with you, certainly for me anyway. FMT is an estimated average earnings which is supposed to give both parties a fair (there’s that word again) target. This means that you should expect the classic bell curve of distribution, with most licensees roughly achieving FMT, some of them falling far short of it and some of them far exceeding it. But try asking the Pubcos how many of their licensees even achieve FMT Martyn, let alone exceed it. However, the problem goes even deeper than that, because I doubt they could tell you even if they wanted to. Because FMT is a sham used for nothing more than justifying inflated rents. I’ll quite happily give you a detailed run down of my own situation across the last 6 years, but it’s too much info for this blog.

                You say; “…you’re assuming without question that pubcos making more profit out of pubs than tenants is “abuse of the tie” – again, what’s your argument for declaring this to be abuse?”
                The issue is not that the Pubco makes a profit Martyn. No half-intelligent person would mind the Pubco making more profit than them if it’s justified (and I’m not talking justified in any moral sense, only in a business sense, for example, if the asset value justifies a high rent but the business cannot generate a high profit for whatever reason). The issue that most licensees have is that the Pubco takes TOO MUCH profit from the business, making it unviable. But worse, they seem to deliberately do this.

                You say: “…and don’t say that pubcos should only take a “fair” slice of the pie – economics, and business, doesn’t work on what is “fair”, they work on what the parties involved in a transaction will accept, which ultimately comes down to supply and demand. Right now there is a constant supply of people wanting to be pubco tenants – Enterprise gets 70 applications a week. Enterprise, and every other pubco, will pitch the amount it takes from a pub at the level which ensures it continues to get a steady supply of new applicants to run its pubs. To demand otherwise shows a regrettable lack of understanding of how business works”.
                Yes Martyn, you have successfully explained how the Pubco system should work. You’ve shown an understanding of that. What you don’t see, because you seem unwilling to investigate it even a little, is how the Pubco abuses this supply and demand. They may pitch a pub at a level acceptable for both parties, for example, but then this changes to a level that isn’t acceptable (ask any tied licensee of more than two years how the ratio between free & tied prices has changed over time). Or they may pitch it at a level that *looks* acceptable to both parties but it will actually be a lie. Of course, people like you will argue that business isn’t fair and everyone should do their own thorough investigations rather than accepting anything one party in a contract might say. But is that really a sensible thing for any educated person to say? Would we use that argument if, for example, your doctor claimed to be qualified but then, on your death bed you found out he wasn’t? Surely, you should have checked his credentials for yourself because “life isn’t fair”? There is a reasonable expectation Martyn that companies will endeavour to tell the truth and act morally. Maybe not all the time but certainly when stating facts that lead up to a contractual signing?

                The great shame of it all is that it is perfectly possible for the tied system to work beautifully, giving both parties a good slice of the profits. The Pubco for the cash they have tied up in the asset and the licensee for the +80 hours he must work every week to keep a good pub running. This is what licensees want but Pubcos, unfortunately, have got away with taking a bigger slice for so long that they cannot let go…

                • Christmas day? THIS Wednesday, if you’re free.

                  What evidence have you provided for your public opinion piece? It’s an opinion piece, an opinion based on many years of observing and reporting and commenting on the beer business, the growth of the pubcos and all the rest, plus researching for articles, reports and books. If you think my opinion is wrong, give me some facts to make me alter my opinion. Otherwise my opinion is as good as your opinion.

                  “The issue that most licensees have is that the Pubco takes TOO MUCH profit from the business, making it unviable.” “Most licensees” is your claim. But you’re ignoring why the pubco takes money from the pub – to cover expenses associated with the acquisition of the pub, and to provide a return on the pub as an asset. Both those things need covering out of the pub’s profits whether the pubco exists or not. If the pub’s profits can’t cover those two items, and all the needs of the licensee as well, then indeed the pub is unviable, and that would again be true if the pubco existed or not. But you still haven’t explained to me the logic behind a pubco making its own pubs unviable. How does that work as a business model?

        • Oh come on Martyn. Evidently you haven’t been bothered to do sny substantial research whatsoever to underpin the off the cuff opinions you publish and promote about the tied pub sector – your deliberately contentious hagiography of Tuppen is towering proof of this.

          The professional profile on LinkedIn says:

          “I am a hugely experienced and multi-skilled journalist and multiple award-winning writer … I am an author, news and features writer … I have excellent news judgment (sic) … I am used to investigating and solving problems … Specialties: …news delivery; writing, interviewing, researching and editing; ”

          You agreed somewhere above that you’ve not engaged with tied lessees – who by definition are the only people who actually experience at first hand what really happens between the pubco and the tied lessees – these are the people who say the tie is abused and you, along with many other people in your position simply do not engage with them at any substantial level. These are real people who work pubs, pull pints and serve the punters. They know what they are talking about, They are not publishing marketing and promotional material supporting a business model. They are describing intelligently, with insight and experience, what REALLY goes on. They have produced, in between working extremely long hours managing their businesses, objectively verified, undeniably strong, irrefutable evidence proving that pubco’s routinely, endemically abuse the tie to consistently take a far bigger slice of profit than the publicans do. The proof includes many submissions to successive government select committee enquiries. The evidence runs to thousands of pages of case histories, examples and clear supporting documentation. It has been published again and again, updated and added to, for a decade and people like you purporting to be arbiters of pub sector events ignore it all, keep toeing the pro pubco BBPA line and stand behind glib statements like:

          “still waiting for them to offer to post me extensive case histories numbering at least in the hundreds”

          As if it’s THE LESSEES fault that you don’t engage.

          It’s disingenuous, insincere and frankly the indication of where your professional standards lie when it comes to ‘reporting’ news on the pub sector.

          You must be pleased that this thread has had such a long response from so many people though – clearly you know how to engage a target audience and keep them coming back for more… of your suppositions and off the cuff assessments of what really is happening in the tied pub sector.

          • “They have produced … objectively verified, undeniably strong, irrefutable evidence proving that pubco’s routinely, endemically abuse the tie to consistently take a far bigger slice of profit than the publicans do”

            That’s classic question-begging on at least two levels – one, you’re taking it as read that pubcos shouldn’t make more profit out of a pub than tenants do (Why? Where is it written that such a thing is immoral/unlawful/wrong? What’s you’re argument for saying this is wrong?) and two, you’re assuming without question that pubcos making more profit out of pubs than tenants is “abuse of the tie” – again, what’s your argument for declaring this to be abuse? And don’t say that pubcos should only take a “fair” slice of the pie – economics, and business, doesn’t work on what is “fair”, they work on what the parties involved in a transaction will accept, which ultimately comes down to supply and demand. Right now there is a constant supply of people wanting to be pubco tenants – Enterprise gets 70 applications a week. Enterprise, and every other pubco, will pitch the amount it takes from a pub at the level which ensures it continues to get a steady supply of new applicants to run its pubs. To demand otherwise shows a regrettable lack of understanding of how business works.

            • Martyn, if you regard this as abuse, so be it. It’s not meant to be. It’s objectively clear, based on everything you post up there about Tuppen’s Army, that you very obviously don’t know what you’e talking about, either that or you are a liar, because if you did know how that company, and the other pubco’s who exhibit exactly the same behaviour, treat their tenants, you wouldn’t be defending what simply is the utterly indefensible in that haughty way of yours.

              That company, Enterprise Inns, is staffed by bullies, liars and cheats. They behave abominably toward their tenants, pure and simple. Their job is to extract everything from the licensee, leave them with so little they cannot stand against the pubco, and if they fail, another ‘lamb to the slaughter’ (reputedly Tuppen’s own words) is ready, as you so helpfully point out above, at the rate of 70 inquiries a week, to be taken in and fleeced then hung out to dry; usually with a hefty Dilapidations’ bill floating after them to the Official Receiver.

              Eventually, when the pub’s been flogged to death through successive tenants having not invested comprehensively in the fabric of the premises, and it’s so run down that no one in their right mind would invest a penny in it; (and if they did have enough to sort out that kind of wreck they’d go and buy a freehold anyway), then the pubco simply puts the pub on the market suitable for alternative use and flogs it off, using the proceeds to chuck into their bottomless chasm of interest on their debts which they can’t keep up with from revenue alone. There are occasional exceptions to this rule – the main one being that if the pubco get a cash offer from a property developer for a particular pub that’s doing well enough for the lessee to not be absolutely on their uppers and the pubco can’t see a way to flogging them in the short term, then the pubco will flog off the freehold with a tenant in place and leave the new freeholder to do the bullying, abuse and piss taking until the tenant is hounded out or has to quit at lease termination when the new boss applies to take the pub back. And sometimes the pubco will have a pub they just know will have a few more years of fleecing in it in which case they do a ‘Landlord’s Improvements’ scheme, spend the least amount possible to make the place lettable, then open it up, like a Venus fly trap, to all comers, advertising it with words like ‘Well established community local’ ‘Great potential for increased food offer’ and other meaningless mind numbing nonsense to attract a new entrepreneurial partner into a ‘partnership’ pact with the devil. You’ll note that Heineken are now making a feature of doing up pub accommodation so the incoming lessees can ‘get on with the job of running the business’ without living in a sub standard run down hovel any private domestic Landlord would be banged up for allowing people to rent.

              There is ample evidence of abuse toward tenants in submissions to inquiry after inquiry. Maybe you can do some work for a change and look it up? I certainly can’t be bothered to do it for you. I was abused as a tenant of Scottish & Newcastle Pub Company, my seeing a pattern of abusive behaviour repeated by successive pubco employees, at every level of the business from BDM to Jeremy Blood ignoring my communications about his staff abusing their jobs. There was no process, no grievance procedure, when they broke their promises there was never any come back, the tenant took it all. My understanding of what was happening to me led me to networking with other lessees, from all pub companies, and discovering that I was not alone in this experience, we all were being told the same lies, mistruths, misrepresentations and distortions, being made the same promises and never having them delivered, given incentive targets to find that nothing happened at the end. And that led to the Fair Pint Campaign being established. Not complicated, just a bunch of hard working, bright lively publicans running very busy pubs realising they were being totally shafted, got together and began making the right kind of intelligible noises about what was happening to them; across ALL pubco’s – to government and every one else who would listen. And believe me at the start very few people were listening Martyn, they were mostly all like you – misinformed, ignorant and abused by the pubco’s having hoodwinked them, as they have hoodwinked everyone, about their ‘business model’ which is very simply put, a massive white collar scam.

              Taking the abuse issue further, as a semantic point, the evidence of widespread abuse is everywhere, all over the UK; in the thousands of asset stripped pubs that litter the countryside and our urban landscape.

              Many, many of these pubs could easily still be trading had the pubco’s, ably assisted by one clumsy, ignorant administration after another, not abused their publicans, the property they borrowed £billions to buy so subsequently we could include their bondholders, shareholders, the general public and communities all over Britain as being victim of pubco abuse along with suppliers, brewers whose margins have been stripped to the bone to get onto pubco price lists, and pretty much everyone else one way or another who’s been taken in hook line and sinker by the pubco’s ingracious hegemony of the pub sector – the hegemony that Tuppen refined and made an attractive art to the bullies that staff pubco’s up and down the land.

              Wake up Martyn, smell the coffee – being served in a thousand Starbucks, McD’s, Costa’s and Caffe Nero’s instead of in the pubs of Great Britain because the pubco’s running off with most of the cash prevented innovation and evolution in the pub sector – the place where Social Networks began, where Cafe Culture always resided in the British Isles which could not move with the times and the customers because there wasn’t enough profit left in the pubs for their publicans to lough back into making the improvements that were needed to bring them into the 20th and 21st centuries.

    • Ben, I haven’t had “an extended dialogue with people who work in the industry on ground level” – I’ve had a very small number of people abuse me and tell me I’m wrong. I’m still waiting for them to offer to post me extensive case histories numbering at least in the hundreds. My mind is entirely open, but it’s not going to be convinced by anecdote, only evidence.

        • Bryan, I’m afraid the answer to that survey can only be: “Well, they would say that, wouldn’t they?” Of course pubco tenants believe life would be wonderful without their pubco. But I fear – I really do fear – it would be the Law of Unintended Consequences once again, just as happened with the Beer Orders. See this week’s :ondon Economics report on the beer tie …

          • As I implied, of course MRDA. But it still suggests there are hundreds if not thousands of dissatisfied landlords out there, and that there might indeed be some merit in the argument that the big pubcos’ business model is more to do with fleecing the unwary than building a sustainable hospitality business.

            Frankly, knowing the kind of sociopathic mentality that succeeds in business these days (I assume you’re familiar with the growing body of research on this?), while I’d listen politely, I would take the sayings of any wheeler-dealer boss with a large pinch of salt. Sociopaths can be the most plausible people you’ll meet.

            Whatever his mentality might be, of course Mr Tuppen has his side of the story, and there’s more to it than complaining tenants, but it might have been better to present the post as an interview rather than as your opinion. (Isn’t hindsight wonderful!)

  14. Hi
    I just wanted to add my experiences with Enterprise and Ted Tuppin to the equation. In 1999 I took on a tied lease in London, the pub was making a very small profit and was in need of a considerable initial spend for repairs and renovation. This initial outlay was all mine and no investment was offered from Enterprise, granted it was a fully repairable lease so I did not expect it. Within two years I had tripled turnover but my margins were being considerably impacted on by the cost of the beer (compared to my Free house competition) due to the tie. Even then a case of Becks cost me £24 when I could have walked to Sainsbury’s and got it for £10, though this would have cost me my lease. Despite a healthy turnover I would some times in quieter months such as January hit cashflow issues as a lot of my business came from the BBC, EMI, Virgin etc. and as I could not afford a credit controller often had to wait 90 days for payment. Unfortunately the lease required I pay for beer within 14 days and Enterprise credit controllers would not negotiate more favourable terms (flatly refused actually) and even said they would not deliver beer if terms were not met. Now here comes the defence of Ted… Mr Tuppin had recently completed an interview where he was quoted as saying that Enterprise always helped its lessees… So me being me I decided to email him directly (having got absolutely no where with credit control, the BDM or senior management at Enterprise). Much to my surprise he emailed me back within 24hrs and terms were changed for us; effective immediately. I have great respect for the man for taking the time to read and react to my email that I cannot deny, unfortunately that is not where the story ends. Within three years turnover was tripled dry sales forming 52% of the increase we were pushing£1,000,000 and surprise, surprise a rent review! Although they only had wet sales figures they requested a 100% increase, I appealed but still ended up with a 68% increase which seriously affected my profitability. At this point I would like to add that I was an extremely experienced member of the license trade and a successful one too, but I can honestly say I was more than a bit taken aback! It felt like pernicious treatment for increasing trade, after all Enterprise were already benefiting from increased wet sales so why try and grasp more money to the detriment of the lessee?? Whichever way I look at it the current status of pub co’s cannot remain and despite the personal attacks on Ted Tuppin (which I don’t think are all justified) things need to change!!

  15. I’m sorry Martin but if somebody says “next Weds” on a Sunday then from where I’m from it means “the week after this coming Weds”, otherwise you’d have said “this Weds”, as you did in your clarification? Simple mix up. I’m afraid I can’t do this week as it’s my final week before I leave my pub (on Friday), so I have too much to sort out. As you’re in London it’s a full day from my schedule so a little more notice would be appreciated.

    This is the last full reply I’m making because it’s starting to bore me so Christ knows what anyone reading it will think! The subject is far to extensive to discuss on a blog, which is the real reason you’re not getting comprehensive, detailed answers.

    Regarding your point about the Pubco needing to take money from the pub, nobody is arguing with that. It’s just a shame the Pubco rarely takes that view about the licensee, who also has the same basic business need. What IS a viable amount for a building owner to take Martyn? Current commercial rents are around 6% of asset value. Many are less in times of recession. What is the average Pubco take from their (often low-valued) asset? Again Martyn, maybe you’d like to ask some of them?

    You seem convinced that Pubcos do an awful lot more for their lessees than provide a building? Could you fill me in on exactly what you think those services are and I’ll gladly give you examples of how they really work (when we meet)? I only ask because I struggle to think of even one benefit my Pubco brought to my business, other than the obvious one of providing the building it’s in, so I’d need a starting point?

    You say: “But you still haven’t explained to me the logic behind a pubco making its own pubs unviable. How does that work as a business model”?

    OK, you may not have read my Nov 29th comment, so I’ll carry on from my comments there, on the assumption you’ll go back and read it now?

    How can the Pubco be happy to watch a lessee’s income slide so much? Why would they not jump in at the first sign of trouble. How could they not get involved, because it’s in their own interests to keep their pubs viable, right? Wrong Martyn, and I’ve already told you why previously, because they’re not Pubcos, they’re property companies (but I’ll give a fuller explanation this time). And to clarify, the only difference between an ‘independent’ Pubco (such as Punch or Eti) and a brewery-owned Pubco is that the latter will be motivated to sell their own brands for the additional profit that obviously brings; neither have much interest in the pub business itself because, where they do, they happen to call those pubs ‘managed houses’; you may have heard of them.

    The crucial point to make is that they don’t actively make their pubs unviable, as that WOULD be a ridiculous business model. What their business model does is transfer all the risk to the lessee so the Pubco can carry on making money whether it’s viable or not. Even that could be argued as good business sense because, hey, if you can get away with it because the product/service you’re offering is so attractive (70 people a week queueing up, right) then good luck to you, BUT it can usually only work with a high degree of, shall we be kind and say ‘truth bending’ and sadly, it often ends up requiring one of the parties to lose their business. You can guess which one. That is what stands it apart from a classic, supply/demand, balanced risk, capitalist model.

    Let’s get a meeting arranged, there’s hours of ‘evidence’ just from that last paragraph, if you’re genuinely interested…

    • Do come back to me in the new year, I really would like to meet.

      On the question of rents/what the pubco extracts, they’ll try to extract what they need to, to cover their costs, which involve a mass of different items. Those costs are not going to be at all related to the commercial rent of similar possibilities. Their costs may be too high for the economic possibilities of the pub, thus making the pub unviable, but that won’t automatically be the fault of the pubco: it may be unviable no matter who owns it.

      • Ok, it’s a date, sometime early in the New Year, will get back to you January.

        I agree totally, many wouldn’t be viable for a variety of reasons other than the pubco, but many would, which is kinda the point! Their costs are far too high due to poor business decisions, which makes them unviable as a landlord in many, many cases but (and this is what the whole debate is about) they try to carry on as if it IS viable, and the only way they can do this is to dupe a lot of people.

        We’ll have an interesting discussion I’m sure…

    • “I’m sorry Martin but if somebody says “next Weds” on a Sunday then from where I’m from it means “the week after this coming Weds”, otherwise you’d have said “this Weds”, as you did in your clarification? ”

      This one’s a fairly well-known trap. At what point does the closest future Weds in the calendar stop being “next Weds” and start being “this Weds” – Fri? Sun? Tue? It seems to vary according to a number of factors, including regional, family background, age, etc. And like irony and jesting, it easily fails to convert to a text-based medium. Best to specify a date, really.

  16. As a former award-winning licensee – and financial victim of the tied-lease system as operated by the property-owning pubcos – I fully concur with everything that has been stated by the other respondants who have FIRST-HAND EXPERIENCE of the rapacious nature of the tied-pubcos. I can repeat similar, and worse, experiences. I too have been through EIGHT YEARS of pubcos prevaricating and dodging recommendations by Select Committee. I am not going to argue the toss on whether a practising licensee has the better knowledge of pubco practice than a beer-blogger – however well-regarded he may be in beer-blogging circles – suffice to say, I note this week that a pubco chief not a million miles from the title of this blog has stepped down. Hooray! went up a collective cheer – mindful of the fact that he has been ‘replaced’ by an equally detested figure. Yes Martyn, only you – and you alone – have written in praise of the man who has almost single-handedly destroyed the Great British Pub. I hope he had the grace to return his CBE on the way out.

    • Stephen, I have spent more than 20 years studying the pubs and brewing business, including at university, for an MBA, writing about it for a number of well-respected publications, and interviewing and talking to many dozens of epeople in the business. I have read all the reports, studies and so on that have been produced since the 1970s and before, right back to the Royal Commission on Licensing of 1931, when the arguments for and against the tied house system raged just as fiercely as they do today. My personal conclusion is that the pubcos are very wise to rebut the recommendations of the select committees, because those recommendations are likely to have an extremely harmful effect on the pub trade. You disagree. That’s your right, although since you are foolish enough to say Ted Tuppen “almost single-handedly destroyed the Great British Pub”, nonsensical polemicising without the slightest basis in fact, I find it hard to give credit even to your undoubted experience in the trade. I have had a number of very senior, very experienced people in the pubs and brewing industry, people much closer to the heart of things for much longer than I have been, tell me my analysis is spot-on. I would certainly not say the pubcos are lily-white, but my observations lead me to believe that in terms of their relationship with their tenants, their main problem is still taking on too many people who don’t have all the skills to run pubs properly: skills which go far beyond having packed bars and winning prizes.

      • Is this blog still getting comments!

        Martyn, I think the point you miss, again, is not the general operations of the Pubcos, as that’s easily defended in the broadest terms, but the way in which they operate when their support is actually required. That’s where the big differences crop up between a genuine Pub Company (IE. one who cares about the long-term future of their pubs, as pubs) and the property companies. Nobody would have a problem if they were honest about this and say they’re in it only for the money but they’re not, and that’s what causes all the friction with the front-line operators. Their public stance is all about ‘caring’ for ‘their’ pubs and their ‘partners’, etc.

        That’s why there’s such a chasm between the general success of managed operations versus the general failure of leased operations, in my view, because it all hinges on what actions are taken when times become tougher.

        I doubt you’ll ever be swayed because you have the (quite reasonable) opinions of “business is business, it’s a harsh world out there, caveat emptor”, etc. etc. whereas the front-line operators often take a different view precisely because they have first-hand experience of how the property company’s initial approach and public stance differs vastly to the reality of their working relationship on the ground.

        You’ll never really understand this unless you do some investigative research on a licensee-by-licensee basis but, again, you can reasonably argue that that’s not your job; your job covers a much broader church as an industry commentator. This is a fair stance to take, but every time you step out of that broad church to offer opinions on matters that depend on an intimate, one-on-one relationship between pubco and lessee (of which you have little experience), it opens you up to criticism. That’s the basic flaw in your journalism you just don’t seem to grasp? To turn a well-known phrase on its head, maybe it’s because you’re such an obviously experienced and knowledgeable industry commentator that you’re only looking at the wood and ignoring what’s happening to the individual trees?

        • “there’s such a chasm between the general success of managed operations versus the general failure of leased operations, in my view, because it all hinges on what actions are taken when times become tougher.”

          Indeed. They sack a struggling manager. They can’t sack a struggling tenant, but they’d be stupid to support a struggling tenant if a disinterested analysis suggests that tenant will, on the performance so far, always be sub-optimal. That’s terrible for the tenant, of course.

          • Once again, your apparently black and white industry view limits the credibility of your opinion? They might sack a manager, true, but only once they have ascertained that the problem lies with the manager? Pubcos, I would argue, rarely look that deeply, which is one of the stark differences between a property company and a true ‘pub’ company.

            Would managed chains not, on many occasions to protect the long-term future of their pub, do some of the following first:

            - Adjust their budget expectations
            - Inject some additional capital or marketing help or other assistance
            - Change or tweak the offer to match the changing market

            Failing that, they may end up disposing of the pub but even then, the manager could be moved to another site. I’d be the first to agree with you that lessees who are not up to the job should not be molly-coddled, but if the Pubco’s actions were partly to blame for those licensees being in that position (a pretty much accepted fact now, certainly for the longer term lessees, is it not) then they should, at the very least, do all they can to make the divorce an amicable one…

      • Well said Steve Wilson.

        Martyn you’re wrong. You are plain wrong and will not have it any other way. You know better than everyone else. But you are still wrong..

        The people who tell you you are spot on are buttering you up because it serves their interests for people like you to keep promoting those apparently objective views. When the Fair Pint Campaign first launched we got a lot of press – it was all over the trade mags and national broadsheets – and we got a lot of people coming forward to find out more about what we were planning and where we thought the industry would be going. I did a lot of the meetings with these people, ranging from sole traders to small private groups to sizeable multiple operators with fingers deep in tied pubco pies, including former senior directors of pubco’s who had worked the other side of the fence (your side) then cut deals wit their former colleagues to set up multi million pound businesses dozens of pubs by assembling the best and most experienced management teams in the industry for their boards and raising private equity money to get up and off. £millions. They all, without exception, were aghast that they were unable to make a profit out of the tied supplies.

        All the meetings were Chatham House Rule. Not one of them would go on public record – for fear of losing everything, their businesses, their homes and their lives.

        I suppose I just imagined all of that.

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