Pub Companies - Business and Enterprise Committee Contents

Memorandum submitted by Camelot Inns

  We are a multiple PubCo running seven units in, mainly, the Hertfordshire area.

  We have been in business for 15 years and employ approximately 50 people across a variety of Public Houses.

  I am writing to raise awareness of issues arising from our trading arrangements with a number of the major Pub Companies, namely in direct dealings with Enterprise Inns, Punch Pubs and Admiral Taverns. I am sure you will receive a number of submissions concerning the blatant unfairness of High rents and High `tied' beer prices, a process that has been abused by the Pub Companies before and after last Select Committee enquiry in 2004 and continues to be the major cause of the demise of a great British attraction—The Traditional Pub.

  I wish, however, to concentrate on one of the strongest recommendations of the TISC inquiry, namely that the nominated tie of gaming and amusement machines should be ceased immediately. The pubco retailers took no notice of this recommendation and continue to not only approve and nominate suppliers of their choice but also to receive from those suppliers the payment of substantial royalties and/or a share of the income derived from machines as a prerequisite of acceptance of those suppliers gaining admission to their estates.

  The above royalties paid to the pubcos are concealed within the machine rentals charged by the supplier so in very many cases the unwitting tenant is unaware of how much income is derived and paid over to the pubco from the income of their machines.

  I consider that this prevailing situation is an anti-competitive, iniquitous, baronial and feudal practice. Tenants sign their lease in the knowledge of the supply clause but through force majeure of the large pubco retailers holding so many thousands of pubs throughout the UK, what real choice do they have if they wish to run their own business as tenants of a pub?

  The pubco "retail agreements" or Leases as they should be known, are, as far as I am aware, the only landlords and tenants lease agreements in existence that tie in the supply of non-core products, ie gaming and amusement machines. It is important to note that these Agreements are not franchises—they are the basis for self employed business people to have the freedom to run a Pub business. The might and strength of the predominant pubco retailers has, however,set this unreasonable practice—and other "hidden ties" as the norm.

  I believe it is essential in the interests of free competitive supply, freedom of choice for the tenant, and, ultimately benefit to the consumer who is the client base of the pub that the above practice exercised by the pubco retailers is ceased.

  I am enclosing some figures using actual numbers from our mix of "Free" and "Tied" Pubs to show the impact on a Pubco retailer of these "hidden rents".


  The Pubcos claim to offer `machine management services' and tie their tenants into a list of "nominated suppliers". To be a nominated supplier you have to agree to pay a royalty, per machine, upfront to the Pubco. This royalty is added to the machine rents and deducted before the tenant/lessee receives his share.

  The royalty payment varies from Pubco to Pubco and indeed from machine type.

  There is no transparency here—but a typical royalty would be £30 per AWP (fruit machine) per week.

  Multiply this by the thousands of AWPs in the Pubco estates and there is a massive "hidden" payment involved.

  The Pubcos say this is 50/50 share agreement. There follows an example from one of our Public Houses.

  Pub "A" with three Fruit Machines and a Pool Table. Weekly Collection
Tenant Dealing Direct with Gaming Supplier
Machines Supplied via Pub Co "nominated" Supplier List
Gross Cash in Box717.40 717.40
Less Rent183.00275.00
Nett Cash after Rent534.40 442.40
Tenant Lessee534.40 221.20
Pubco Share221.20
Pubco Royalty  92.00

  Totals per annum; Based on this one unit.

  Tenant "free" of Pubco tie receives £27,780.

  Tenant "tied" to nominated list receives £11,500.

  Pubco total from share/royalty £16,280.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 13 May 2009