Pub Companies - Business and Enterprise Committee Contents

Memorandum submitted by Paul Daly


  I am a free of tie operator for the last five years. My bar "Zigfrid" is in Hoxton Square, London N16NU. It is a successful bar and I am able to negotiate prices based on the volume of sales.

  On 11 of April 2008 I bought a Unique Taverns lease (owned by Enterprise Inns Pic) at 243 Old Street, London EC1V 9EY. This bar is tied on beer and packaged products.

  I opened the venue now called Roadtrip at 243 Old Street after extensive refurbishment works on 29 July 2008. Now being a licensee of both tied and tie-free leases I am in a perfect position to draw comparisons between the two.


  Enterprise Inns Plc (Unique Taverns) have a head lease with Hackney Council at £1,000 (one thousand pounds per year).

  They charge me £26,000 per year making a 2,500% profit (two thousand five hundred per cent).

  I have never made 2,500% profit on anything in my life and think Enterprise Inns Plc should be more than satisfied with this huge extortionate profit but instead it seems they are driven by greed simply because they can.


  I cannot believe this kind of extortionate middlemanship still exists in 2008. As a person who has been self employed all his working life I am amazed by a situation where one is not free to purchase products from the most competitive source to sell in your retail outlet that has cost so much money to refurbish and get right.

  The PubCos argue for the benefits a tied lease can offer: "There's clearly a lot less initial capital investment. And in tougher trading conditions tenants and lessees are more likely to be supported by a landlord than they are by a bank. Banks are calling in their lending, but clearly we have a vested interest in a pub continuing to trade successfully." (Simon Townsend, Enterprise Inns, chief operating officer. The Publican, 3 September 2008).

  As a licensee I say it should be solely down to the operator to estimate the trading conditions and act as they see best. Currently there is no choice between a bank and a PubCo whereas this choice should and must exist. If PubCos are so confident in the benefits their middlemanship brings to the operators, they should have no arguments against this choice being granted. In reality, of course, the tied lease is actually the reason why more and more pubs and bars find it difficult to trade successfully every day. The vague idea of being supported by a PubCo is a utopia. The dying of England's pubculture is not down to naturally changing social habits—it is the greed of the PubCos.

  To demonstrate how much Enterprise Inns Plc charge over and above the prices I pay for free of tie products I have commissioned my accountant Cecile Edwards to do a like for like comparison between Unique Taverns (Enterprise Inns Pic) tied lease and my free of tie lease (attached Appendix 1).

  If the committee shall need proof of any invoices from Enterprise Inns Plc to prove the above figures and comparisons I shall be happy to supply them together with invoices from Coors regarding my free of tie site. My solicitor can verify the head lease rent and my rent and my accountant could appear in court if so required by yourselves.



Coors vs Enterprise
Zigfrid Road Trip

Size Net PriceNet Price £%

11g£90.28 110.75£20.4723%
Carling11g£64.33 103.46£39.1361%
Grolsch11g£77.32 119.51£42.1955%
Sol24£18.04 23.65£5.6131%
Budvar24£15.99 24.44£8.4553%
330ml coke24£8.49 9.71£1.2214%
330ml diet coke24£8.49 12.45£3.9647%
Baby Bitter Lemon Schweppes 125ml24 £4.986.05£1.07 21%
Baby Ginger Ale Can Dry 125ml24 £4.386.05£1.67 38%
Baby ginger beer Schweppes 200ml24 £6.217.28£1.07 17%
Baby slimline tonic Schweppes 125ml24 £4.387.28£2.90 66%
Blackcurrant Cordial Schweppes12 x 1 ltr £10.8014.55£3.75 35%
Lime Cordial Schweppes12 x 1 ltr £10.8014.55£3.75 35%
£324.49 £459.73£135.24 42%

Based on exact product matches as above. Enterprise are billing + 42% on average.


  Further to your instruction, we have made a direct price comparison on products purchased at "Road Trip"—a bar you own which has a brewery tie with "Enterprise" and those which are bought at your free house "Zigfrid".

  For the comparison, we have selected the main beverage supplier from "Zigfrid", namely "Coors" to compare against "Enterprise", the Brewery and supplier to "Road Trip".

  In order to make the sampling of prices fair and in order to see the effect of price variances which directly effect your business, we have selected your latest order from "Coors", and matched the products to the "Enterprise" price list.

  The results can be seen on the attached table, product by product, but in summary are as follows:

  On average "Enterprise" charges you 42% more on purchases, compared to those bought from "Coors". The largest price list variances seen on this comparison was 66% and the lowest being 14%.

  Overall and based on prices being 42% higher, this will undoubtedly have a considerable effect on your gross profit margin. If for example you take the GP margin at "Zigfrid" at say 70%, then you factor in the increased purchase prices and without increasing the sales price, your GP would only ever achieve to 57%.

  It must be noted, that the above percentages are based on the average higher price and average usage of all products. You must expect less of a margin as shown on the attachment for products such as "Carling" where the price is 61% higher that that of "Coors".

29 September 2008

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