HC 1369 Pub Companies

Written evidence submitted by the Institute for Public Policy Research (IPPR)

In January 2011 IPPR was commissioned on behalf of CAMRA and the Campaign for a Fair Pint to investigate the current status of the tied pub industry. This memo presents several of the preliminary findings which will be released in a final report due to be published in July 2011. The following observations are based on a poll of 424 tenants of tied pub outlets conducted by CGA Strategy in April 2011. [1]

Management and Experience

· Nearly two-thirds of all tied tenants have managed their pub for more than 3 years. 15 per cent however have been managing their pub for less than 1 year while the remaining 17 per cent have had their pub between 1 and 3 years.

· When tied tenants were asked how much longer they plan to manage their pub there appears to be some doubt about longevity. 1 in 3 tenants do not believe they will continue to manage their pub after 3 years with 14 per cent predicting they will no longer hold the pub within 1 year.

· 3 in 4 tied tenants have had experience in the pub industry prior to managing their current pub. The core of respondents that did not have prior experience – 37 per cent – had worked in a ‘professional’ category, this includes office workers, teachers and managers. 11 per cent had previous catering experience.

· 42% of tied tenants said they did not have any training before they signed their lease. Tenants who have not had any industry experience or training equate to roughly 10 per cent of all tied pub outlets.

Financial Stability

· A significant number of tied respondents – 46 per cent – claimed that they earn less than £15,000 per annum. Only 11 per cent claimed their personal income was over £30,000 per year.

· A majority of all tied tenants – 58 per cent – state that they are financially struggling.

· When investigating the reasons causing financial instability, 90 per cent of tenants facing difficulties blamed the recession. 88 per cent of these respondents noted the strain of the beer-tie, followed by 87 per cent mentioning competition from supermarket pricing.

· When investigating the tied model further, IPPR calculations show 78 per cent of those who mentioned the beer-tie as affecting their financial stability also mentioned the cost of rent as a contributing factor. The claim that lower costs in the dry rent offset the beer-tie is not a view shared by an overwhelming majority of tied tenants.

Pubco Evaluation

· Approximately one-third of all tied tenants have not received information relating to their pubco’s code of practice.

· A vast majority of tied tenants – 71 per cent – believe that the new code of practice will have no significant effect on their business while only 17 per cent believe it will benefit them.

· Just 36 per cent of tied tenants believe that a dispute with their pubco would be dealt with fairly. 40 per cent of tied tenants do not know if their pubco would objectively deal with a dispute, indicating a lack of consultation regarding guidelines and procedures for such matters between companies and tenants.

· Only 1 in 3 tenants believe that their pubco offers any value to their business. The majority – 52 per cent – claim their pubco adds no value while 16 per cent are unsure.

· Of the minority that claim their pubco does add value 86 per cent indicate provision of business training as the most noted reason. Recognition of brand name was stated by 59 per cent of these respondents followed by general training with 57 per cent.