Examination of Witnesses (Questions 220
- 239)
TUESDAY 6 JULY 2004
ASSOCIATION OF
LICENSED MULTIPLE
RETAILERS
Q220 Sir Robert Smith: Just to get
this in context. If I walk into a pub, what is the percentage
of chances that it will be managed by someone with an interest
in multiple operations as opposed to a single licensee?
Mr Bish: About 10,000 pubs are
managed throughout the country. There is an element of double
counting because Alex Salussolia, for instance, has leases, but
he also has managers in those pubs. So there is an element of
double counting. But out of the 53,000 pubs in England and Wales,
about 10,000 are managed.[2]
Q221 Sir Robert Smith: One of the
things we have had in evidence is that the quality of the advertising
for prospective tenants is misleading and may give too rosy a
picture and does not show them fully what they are getting into.
Also, prospective tenants are not supplied with all the information
which would help them to make an informed choice before they sign
the contracts. Do you agree with this concern? Would it explain
the high turnover of tenants?
Mr Bish: Shall we talk generally
in a minute, because it occurs to me that we are speaking about
multiple lessees and Alex is taking leases so he can comment on
what information he has had.
Mr Salussolia: I cannot really
comment on the individual tenant as I have no experience of that.
From a multiple point of view, we have a fairly educated view
of the market and we have the ability to research business, so
we do not tend to get lots of marketing material to get us excited.
We work with the particular pubco and decide whether it is a model
which works for us or does not work for us.
Q222 Sir Robert Smith: So it is probably
more in the individual market, which is not really your area of
expertise.
Ms Nicholls: Our members are not
a target for those kinds of adverts and therefore we do not take
a view.
Q223 Sir Robert Smith: Do you find
in your negotiations, given your experience, that you can get
the information you need?
Mr Salussolia: Yes, we certainly
get the information we need. Whether that is more than they give
to other people, I could not comment.
Q224 Sir Robert Smith: Do you find
there is any difference between the kind of person you are negotiating
with when it is a pubco and different kinds of property owners
as to the amount of information you get?
Mr Salussolia: No; every negotiation
is unique.
Q225 Mr Hoyle: You have been discussing
a little bit about leases and rents and you mentioned that with
new leases some companies, and I do not know whether it is widespread,
actually now state that you do not just have upward rent increases.
Is that pub companies across the board on new leases? More importantly,
is that on existing leases? Are they being changed to accommodate
it?
Ms Nicholls: From the evidence
we have, an abolition of upward-only rent reviews is becoming
increasingly common. There are certainly companies which are doing
it for new leases; there are others who are looking to do it retrospectively
as well. There is nothing I can give you an answer on which is
across the board for every single pub company. Some people have
never had it. Some people are introducing it.
Q226 Mr Hoyle: How many pub companies
do you represent?
Mr Bish: Thirty or so which issue
leases.
Q227 Mr Hoyle: You have 30 pub companies.
Have 25 now abolished upward rent increases?
Mr Bish: We do not have that information.
Q228 Mr Hoyle: Could we try something
a little different then? Could you find out from the pub companies
and let us know in writing how many are doing it, because if we
say this is happening and that it might be five companies, it
could in fact be 29 companies. I would not want to do an injustice,
so if we could have that evidence, it would be very helpful.
Mr Bish: Yes.
Q229 Mr Hoyle: Could you also let
us know whether there have been any retrospective changes to existing
leases, how many companies have done that and what percentage
of pubs have been allowed to have that enshrined?
Mr Bish: Yes. The point you make
about the number of pubs is very important, as opposed to the
number of companies. One company with 9,000 pubs would be quite
a significant player in this matter.
Q230 Mr Hoyle: That is right. However,
if it is only new leases on new pubs, it does not really matter,
but could we look at existing and enshrined?
Mr Bish: Sure.
Q231 Mr Hoyle: Just out of interest,
how many good pub companies do you represent and how many bad
ones or are they all the same?
Mr Bish: We represent 30 very
good pub companies.
Q232 Mr Hoyle: So there are no issues,
no problems, they deliver a good service on behalf of whom?
Mr Bish: They are good in the
context of running their businesses. They are looking after their
businesses and their businesses are a partnership between themselves
and their lessees.
Q233 Mr Hoyle: So hand on heart you
can say to me that the landlords get a fair deal from companies
you represent. Hand on heart. Come on.
Mr Bish: I do not believe that
any pub company sets out to do an unfair deal.
Q234 Mr Hoyle: That is not the question.
Mr Bish: In that case I do not
know the answer to your question.
Q235 Mr Hoyle: So in fairness you
do not know whether they are good or bad. In fact, as long as
they pay your fees, you do not mind representing them and you
will accept whatever they tell you.
Mr Bish: I believe they are good;
it is just that I do not know it.
Q236 Mr Hoyle: You do not know that
they are good, so you just accept what they tell you.
Mr Bish: I believe they are good.
Q237 Mr Hoyle: Let us try another
one. Would it be fair to say that in your submission you give
the average rent as £1,200 per pub per week?
Mr Bish: About that; £60,000
per year.
Q238 Mr Hoyle: That is a lot of money
before you have taken the extras such as electricity, heating,
cleaning into account, is it not? It really does take the sting
out of it.
Ms Nicholls: In our submission
we did point out on the information we provided from the survey
of our members that it was a high level for the trade as a whole
and should not be taken as a representative figure for the trade
as a whole. The members we represent, being multiples, tend to
have bigger outlets and some very expensive high street locations.
The more typical figure is a rent of about £30,000 to £35,000
per annum, not the £60,000 that we found in our survey. Sixty
thousand is only typical of our membership.
Q239 Mr Hoyle: I think your highest
are £155,000. Averaging that out, I thought I was being quite
fair at £1,200 a week.
Ms Nicholls: That is for our membership.
Getting back to the smaller individual tenants—
2 Note by witness: I understood the question
to be about the proportion of pubs that were managed businesses
within companies that were themselves multiple operations. The
answer given was a response, for England and Wales, to my interpretation
of the question. For a wider and definitive answer, I would draw
the Committee's attention to Table 1 of our memorandum which is
Quantum Business Media's description of the ownership breakdown
of UK pubs as at January 2004. Back
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