Pub Companies - Business and Enterprise Committee Contents


Memorandum submitted by Borough Arms

  Following are my experiences relating to the Licensing Act 2004 recommendations when dealing with a rent review with Admiral Taverns one of the biggest of the tenanted pub operators.

MY BACKGROUND

  Despite best efforts our small wet led community pub situated on the outskirts of a medium sized semi rural town had suffered from decreasing turnover of £17K and 20K respectively over the two years preceding the rent review.

  Our lease is a 20 year fully repairing and insuring issued by Whitbread in 1992. With no upward only clause in the lease—and no minimum annual cost of living increase based on RPI.

  We are tied for beer and bottled beer only—with a discount of £25 per brewers barrel on purchases from the pubco.

  At our rent review last tear (June 2007) our pubco proposed a rent increase of 8.2% for next three years.

  Admiral Taverns stated that it was the minimum they could impose and merely represented a cost of living increase. We refused to agree rent proposal—but have still been billed and have paid it since.

  My BDM's response to our refusal to sign rent agreement was an blatant verbal threat to withdraw the rent offer and take us to arbitration where he stated I could expect to have an increased figure imposed on me and payment of that increase backdated.

  I requested and was given a copy of figures used to set rent increase—based on our actual trading figures obtained from pubco figures and information supplied by myself.

  A letter was written to the Chief Operating Officer stating that we wouldn't agree to the increase based on some of the factors noted here—no reply was ever received.

  From experience of other pubs we have invested a higher than average amount of personal capital in the pub to improve its appearance and comfort for customers and to install a commercial catering kitchen and outside patio are/smoking area.

  Based on my experiences with rent review I would make following notes:

    (a) our turnover had decreased despite our best efforts to maximise trade—and therefore our ability to pay rent had decreased and hence I requested a reduction in rent.

    (b) we had no annual cost of living increase written into our lease.

    (c) we had no upward only rent review clause.

    (d) rent increase was being based on our actual trading figures and not a hypothetical tenant.

    (e) personal investment in the premises that had resulted in increased trade for myself and the pubco had not been taken into account when rent set.

    (f) the rent calculations took no account of an increased income from sales of tied beer products.

SUMMARY

  In my opinion the Licensing Act has resulted in maintaining an uncompetitive position for tied pubs such as my own and consumers alike.

REASONS

  We are stopped from buying products at free trade prices and passing those lower prices on to customers.

  We are forced to pay a market rent and pay higher prices for tied products (despite the £25 discount per brewers barrel).

  Some of the codes of practice laid down in the act are being paid lip service to by the pubco—ie making rent calculation available—but then the ban on UORR has been ignored as has right to arbitration between tenant and pubco also been ignored.

  Competition has been stifled by forcing pub tenants to pay grossly inflated prices for beer—and full market rents too—resulting in much higher retail prices for products that free of tie and managed outlets are able to charge.





 
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