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.
UPWARDS ONLY
RENT REVIEWS
(UORR)
(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.
* * *
* * *
ARBITRATION STATISTICS
(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.
EFFECT OF
LOST REVENUE
TO THE
PUBCOS
WERE THE
WET RENT
AND/OR
THE AMUSEMENT
MACHINE TIE
TO BE
ABOLISHED
(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 Take | 200 |
200 | 200 |
| VAT on take @ 15% | (30) |
(30) | (30) |
| Net Take | 170 | 170
| 170 |
| Licence Duty (LD) | (15) |
(15) | (15) |
| Net Take Post LD | 155 |
155 | 155 |
| Rent paid (pubco rate) | 53
| 69 (av) | 40 (2008-09 deal to machine co)
|
| Estimated Landlord Rent | |
| |
| Take, after rent | 102 |
86 | 115 |
| Pubco agreed share @ | 33.3%
| 50% | — |
| Lessee share amount | 68
| 43 | 115 |
| Pubco share amount | 34
| 43 | 0 |
| Profit to pubco | 13 |
28 | 0 |
| Illustrative benefits | |
| |
| Total to pubco | 47 |
71 | 0 |
| Total to lessee | 68 |
43 | 115 |
| Total to machine co (basic rent) | 40
| 40 | 40 |
| 155 | 155
| 155 |
| |
| |
THE BEER
TIE
(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.
OPERATING COSTS
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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