Pub Companies - Business and Enterprise Committee Contents

Memorandum submitted anonymously

  In my experience the BBPA Code of Practice has not been robustly adopted by the Major Pubcos, Enterprise Inns Plc most particularly.

  In January 2007 I was in correspondence with G E Tuppen, CEO Enterprise Inns plc concerning complete lack of support/business advice/guidance as given by any of five Business Development Managers I had encountered during my tenure with Unique/Enterprise pubco. Having just devoted six years of my life, some considerable physical, mental and financial Investment Included, I was on the verge of Bankruptcy.

  Potted history of me.... 52 years of age, thirty-plus years experience in the licensed and catering trades having managed my first pub at the age of 21. Former Member of B I and Member of CFA, Craft Guild of Chefs since 1976. Former vice-Chairman of local Parliamentary Constituency Assn, and founding Chairman of Penarth and Dinas Powis Pubwatch Scheme. Attended 2004 TISC as a interested observer.

  Took on my first pubco opportunity with Unique (now Enterprise). In May 2001: Pushed into signing a new lease by my then BDM, ahead of completion of Schedule of Dilapidations from out-going lessee. Was offered further opportunity in a neighbouring county, no in-going and a full refurbishment planned. I'd obviously become a "good catch" for the BDM and with a growing track-record of perceived success, took on a third opportunity. So, within the space of six months I was now responsible for the running repairs, rent and trade of three, previously near-closed premises.

  Upon requesting trading Information on each of the three premises, is provided with nothing by the pubco, aiming that they did not have access to the out-going lessees' records. Neither did they provide any sight of barrelage or purchasing trends. Each of the three premises, i later discovered, had a record of recent and continuing financial difficulty of which the BDM would have been patently aware.

  I battled on, with varying degrees of success. I off-loaded one of the additional opportunities, by Introducing a couple who moved to a new lease, having lost circa. £20,000 In the 12 months I had operated the business The Schedule of Dilapidations In the original premises poorly executed and, despite constant reminders to the Estates Dept. I was unable to achieve completion of some of the most basic requirements, it has been particularly irksome to find a number of the very items I was waiting for completion on, to have appeared on my out-going Schedule! despite having spent over £40,000 of my own money on improving basic facilities In the main business, for example, new bar-fronts, extensive wall-panelling, shelving and skirtings, together with a feature fireplace and new fixed-seating throughout; that was claimed by enterprise as "landlord's fittings".

   Whilst those works were undertaken the BDM in place suggested that he could arrange a rent concession, given that I was having some difficulty in selling the other remaining lease and that it was costing me some £900 per week to maintain It as going-concern.

  I was consistently working some 90-100 hours per wet. The only time we saw a BDM was if the rent was late or trade payments were delayed in any way. Or, as in the can of the requirements of the new Licensing Act, to make sure our Premises Application was in at a further cost to us of some £2,000.

  Routinely, deliveries would turn up late or damaged the BDM was nowhere to be seen then! Maintenance issues would be passed from pillar to post with no tangible or Immediate solution offered. In particular, drainage and cellar-cooling problems would be ignored at peak times in both properties and ultimately it was left to me to arrange and pay for temporary solutions whilst they "looked into it".

  When I eventually disposed of the second "opportunity" at a net operating loss of some £60,000 over three years, I moved the manager and his working partner to the main business which was now performing well at around £10-12,000 of weekly turnover, entirely due to my efforts. However, because the accommodation above the pub was uninhabitable (it was de-listed for the purpose of Council Tax), I had to rent a further flat to provide them with the live-in portion of their salary package. Mr Tuppen is happy to champion the value of the live-in benefit to be around £9,000 per annum. He was not so happy to compensate me for the loss of amenity, however. Nor was he prepared to reduce the rental on the un-usable portion of the premises.

  Ultimately, I must accept full responsibility for my financial undertakings. However I can categorically state, were it not for the Insatiable greed of the pubco-systsm, I would not have been made bankrupt. In a six-year period, I re-opened three previously closed premises, made Investment in all of them, allowed Enterprise to amass approx one million pounds In rent and trade, and yet I end up owing £100,000 to HMR&C. Why? Because of the greed of the pubco complicit in the knowledge that I had to use receipts of VAT and Revenue to support my cash flow and settle their account under threat of non-supply. I would wager that there Isn't a failed tenant/lessee in the COUNTRY who did not go bust without owing VAT and/or tax; having first suffered the duress to settle the account with their respective pubco.

  And It gets worse....

  Having surrendered my final lease to Enterprise in March 2007, they immediately advertised it for sale on their website for £138,500. That was my only remaining asset. And enough to clear my tax liability! I left everything in the pub for a seamless handover to the new Incumbent, having agreed a paltry valuation of £13,000 for F&F. (The aforementioned Improvements were "claimed" by Enterprise and did not form any part of the valuation).

  Under protest, I did not sign a "departure statement".

  In the week after my departure, they sent a fictitious Schedule of Dilapidations, un-priced, and it has taken me over 12 months to illicit the costs Involved. Surprise, surprise eight out of ten items were outstanding at the time I originally signed my lease. They did not see fit to provide me with the statutory notice of application to close a registered leasehold title; were they afraid the Official Receiver may have attempted to realize some value in it?

  I took, and paid for legal advice throughout my association with the pubco. On three occasions I paid for Surveyors' reports relating to two of the premises. Those reports were ignored by the pubco. I remain convinced they only have one aim ... to suck people in, often with no experience and let them learn by their mistakes. Sadly for them, the supply of "lambs to the slaughter" is now drying up.

  I believe six years is way above the average life of a current tenant/lessee, therefore I deduce I must have done something right. Indeed, I was a finalist In the Pub of the Year Awards In 2002, a regional finalist in the Perfect Stella promotion, and first In the UK for a Budweiser/World Cup promotion In 2006. However, each of the three "opportunities" managed by me over that six-year period, have now further changed hands AT LEAST TWICE since my departure. The real question that needs to be asked of the pubco is this....

What constitutes a PUB closure?

  I took on three previously-failed businesses. Each one of those has now changed hands at least twice since. I make that 13 closures between three pubs in six years. (And how many of those were in debt to HMR&C?)

  Are they Intent on continuing to over-rent unviable premises? Will they ever adopt a fair and equitable means of assessing rent in a falling market? And will they EVER end the ubiquitous beer-tie? It is not the salvation of small brewers, as they claim, it is the ruination of many businesses, many dreams and many people.

  And as for the latest figures from BBPA claiming that pubs are closing 18 times faster than In 2005, now up to 36 per week ... I haven't even touched on the effects of the Smoking Ban, Credit Crunch or cheap supermarket booze!

29 September 2008

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