Memorandum submitted anonymously
I believe my recent experiences running pubs
for one of the major pubcos is relevent to your inquiry into pubcos.
BRIEF HISTORY
I have run four pubs over the last 24 years
with the most recent being:
The Swan at Nibley which was operated by Courage,
Inntrepreneur, Unqiue and finally Enterprise Inns and I ran for
21 years. My tenancy finished in May 2008.
The Frog & Bulrush which was operated by
Enterprise Inns and I ran for five years. I sold my lease in February
2008.
My main contention is the unfair position the
tied tenant/leaseholder is in when trying to challenge the might
of the pubcos and the often scandalous treatment of us. Prior
to the introduction of the Beer Orders tenants belonged to tenant
streams and LVA's who championed our causes. Nowadays these are
virtually non existent tenants being left to the mercy of pubcos
trusting them to be fair. Unfortunately the only reason for pubcos
existence is to pay dividends to their shareholders, treating
tenants/leaseholders fairly is not a priority.
Pubcos will argue that there is a legal discourse
to settle disputes. This is not true. To be able to challenge
using the legal system costs thousands of punds, something most
publicans cannot afford. There is little profit from running pubs
nowadays. Usually failing tenants leave quietly having lost their
money. New tenants have been easy to find oftent raising the ingoing
or price of a lease by the sale of their former home or from redundancy
payments.
There seems to be a minimum figure of £30,000
which pubcos need to yield from a site irrespective of its profitability.
They will argue that that should be the minimum wage for the publican
operator and according to their calculations of 50% profit all
should be well. The yardstick of 50% is not realistic in today's
market. The number of pubs currently closed as unviable were not
on a "no rent level" but they were on a "no profit
level". In today's trading conditions the publican is expected
to comply with masses of legislation: Access for the disabled,
minimum wages, maternity benefits, increased holiday entitlements,
increased health and safety requirements, more onerous fire regulations
and the smoking ban. This all needs funding.
I purchased the lease on the Frog & Bulrush
in 2003 which had a low rent of £15,000. I began the process
of upgrading an old and shabby building. I was fully tied for
beer and cider and had no guest ale provision. I paid full list
price with no discounts. At my first rent review the proposed
rent was £31,000 more than a 100% increase. Nothing had changed
in the local environment or economy to justify such a rise. I
braved things out and eventually we went to arbitration. The arbitrator
ruled a little above the caulderbank offer from Enterprise Inns.
Not able to make a realistic profit and being required to pay
my legal fees together with Enterprise's I sold the lease. I had
no other option. I feel the arbitrator is not on the side of the
struggling tenant but rather on the side of him who feeds him.
They too have to live with the power these giant companies from
whom they need to earn a living. I was an experienced publican
who ran a busy pub which served food, was clean and tidy, had
well trained staff but was not able to make sufficient profit.
My other pub The Swan at Nibley which had also
come under the Enterprise umbrella was due to have its non assignable
lease renewed—formerly referred to as a tenancy. Having
recent experiences of Enterprise Inns and having a period of ill
health I decided not to renew my lease and gave nine months notice.
As a sitting tenant I knew this was required and needed to be
registered with the court. I was assured that there would be no
problem reletting the pub on a long lease. A new tenant was found
but decided not to proceed due to the transfer of undertakings
obligation. Enterprise then decided to run the pub using a management
company in the interim whilst they found another new tenant. On
the day of changeover 19 May 2008 their representative met with
the staff to tell them the pub would close for a few days whilst
the management company found a manager. They were not to be paid
but were laid off and as such could claim benefits. I am not sure
of the legalities of what they have done but I do know my ex-staff
are taking me to an industrial tribunal to claim redundancy payments
and unfair dismissal payments which will cost me £10,000
to defend and which I cannot reclaim as costs. Needless to say
they have not been re-employed and the pub lies empty. The original
new tenant will shortly be taking a lease on the Swan minus the
staff; the whole exercise was to save themselves or Enterprise
paying the transfer of undertakings and leave me footing the bill,
approximately £35,000. This will use up my life savings.
What a way for us all to be treated. My long serving staff should
have been given proper notice and proper payment if they were
not required by the ingoing tenant instead they lost their jobs
overnight and I stand to loose the little money I have left which
will leave me facing retirement penniless.
The Government cannot have envisaged the outcome
of the changes they made to achieve more choice for customers
and to break the monopoly of big breweries but in the process
they have created these monster companies which are ruining people's
lives and livelihoods. The old brewery tied tenant system was
not without its problems and change was needed but what we have
in its place is far worse. I speak from experience having worked
with both.
15 September 2008
| 
