Pub Companies - Business and Enterprise Committee Contents

Supplementary evidence from the Association of Licensed Multiple Retailers

    —  Paragraphs 1-10 are amplification of answers given in evidence to the Committee.

    —  Paragraphs 11 and 12 are supplementary information which we believe will further inform the Committee's understanding of the ALMR's opinion on matters not included in our formal submission.


(ref: qq 168 and 175 and ALMR replies)

  1.  ALMR does not formally get involved on members' behalf with rent reviews, nor do we carry out formal surveys. We do nevertheless have anecdotal information that there are cases where a rent has been reviewed downwards notwithstanding a UORR clause being in place. The Committee will understand that this is information is commercially confidential and we recommend that the following are contacted for detailed answers.

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(ref: q174)

  4.  All three witnesses in our session were asked this question. ALMR does not collect this information and therefore cannot assist the Committee other than to suggest that the pubcos (those attending or otherwise) would be parties to arbitration issues and would likely be able to help.


(ref: q 185 and ALMR reply)

  5.  I did not reply to the question about "wet rent". This is far more complex than could be answered in verbal evidence, and even in writing the variables are peculiar to the individual premises and to the supply agreements in place.

  6.  I withdraw my assertion that the loss of amusement machine revenue would be "in the order of £5 to £10 per week per machine per pub." Having looked again at my notes and sought confirmation I should have stated that the figure was more likely to be between £45 and £70 per machine per week.

  7.  This revised figure is based on reports from a multiple operator, an ALMR Member, as per the illustrative table below. This figure is robust but not necessarily universal and should not be extrapolated without due consideration to regional differences, the decline in amusement machine takings generally and the fact that different operators have different agreements with the various pubcos.

  8.  Comparison of amusement rental and profit streams. (Note: the rent paid to the pubco is greater than actually paid to the machine co, and this is profit to the pubco in addition to the agreed split of net take.)
Voyager Lease £ Enterprise Lease £ Free of Machine Tie £
7 Day Take200 200200
VAT on take @ 15%(30) (30)(30)
Net Take170170 170
Licence Duty (LD)(15) (15)(15)
Net Take Post LD155 155155
Rent paid (pubco rate)  53       69 (av)40 (2008-09 deal to machine co)
Estimated Landlord Rent
Take, after rent102   86115
Pubco agreed share @         33.3%     50%
Lessee share amount  68   43115
Pubco share amount  34   43    0
Profit to pubco  13   28    0
Illustrative benefits
Total to pubco  47   71    0
Total to lessee  68   43115
Total to machine co (basic rent)  40   40  40
155155 155


(ref: q186 et seq and ALMR replies)

  9.  Following the evidence session the trade press headlines reported an ALMR position with regard to the Beer Tie that it does not necessarily hold, and study of the transcript will confirm this. If it helps the Committee we would confirm that ALMR does not challenge the legality of The Tie nor indeed is against the Tie itself especially in so far as it relates to brewers who own their own pubs or indeed to the smaller companies with their tenancy agreements.

  10.  ALMR, on behalf of its Members who are multiple operators, would however challenge the pubcos' usual requirement for compulsory supply agreements on long, fully repairing and insuring leases. A full repairing lease implies the lessee having an asset that can be sold on, but the inclusion of the purchasing requirement can make the business less attractive to a prospective purchaser at assignment. Lessees would, for this and other operational reasons, welcome the opportunity to choose to negotiate lease terms that properly reflect the open market and then to be able to enter into separate supply arrangements.


  11.  There was an indication that the Committee wanted to address the issue of costs but the opportunity never arose. In this supplementary submission the ALMR would report that the Association collect "benchmarking" data on an annual basis and can offer this to the Committee—historically or in January 2009 when our third survey is completed.

  12.  In early 2008 we reported that the operating costs before cost of sales and rent, and averaged across all types of pub and bar businesses was about 52% of sales. In community pubs, which could reasonably be associated with the pubcos' estates, this figure was about 45%. Costs and especially increased costs are attributable to any number of causes but we submit that the pubcos should properly allow for operating costs when arriving at the assessment of fair maintainable trade and the divisible profit.

2 January 2009

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