Pub Companies - Business, Innovation and Skills Committee Contents

Written evidence submitted by Keith Heaviside

After watching the Commons Committee meeting regarding Pub companies this morning I am compelled to write to you with current issues I have with a large Pub co.

I managed to see that Punch and Enterprise were present at this Committee meeting but I did not pick up on any other Pub co's.

My full time position is working within the finance sector, I work daily with balance sheets, accounts and business plans giving me a very good footing at being able to see if my pub business is succeeding or failing.

I have a tenanted pub through Admiral Taverns, I went into this public house on a tied agreement and a set rent, I have had this pub for just over two years and in my first year of trading things went well with no increases on rent or stock.

At the start of my second year 2011, the Pub co sent me a letter informing me that they were exercising their right to an RPI in my rent, this was closely followed with three increases in beer prices blaming the brewers, VAT and then their own overheads, I have had to pass on that cost as much as possible to the general public and it has now pushed the priced on a pint of beer from £2.40 to £3.10 in the space of six months, this has made me the most expensive Pub in the town of Barnard castle. Three other tenanted pubs have closed down in the past 12 months and the others are Pub co owned and run and they're able to offer beer prices 15p-20p per pint lower in cost.

The Pub co also runs a brew lines system, this indicates every drop that goes through the lines and if you show anything over what has been bought through the brewery the fines are extortionate. When we run low on lager or beer we borrow from another local Pub, we then replace that barrel on the next order, but in some case it may show a difference of 5-10 pints in our favour. Eight months ago this was the situation and the Pub co have fined me over £1,000 for a difference that would cost around £100.00. I have been fighting this with the pub co for the past eight months but they are adamant this must be paid and have even threatened to stop supply.

The agreement with the AWP machines is also one that is weighted in the pub co's favour, it is 50-50 on any profit made on the machine after the rental on the machine is paid. By the time we pay the electric bill on these machines there are no profits to be had, but the Pub co has 100% cost free profit.

The BDM that was looking after us offered no support in any way, any issues that arose were brushed under the carpet and we are still awaiting the response from the Pub co on the fire safety equipment and lighting, it has been deemed unsafe for use and condemned. The Pub co have been aware of this for over 15 months but are not willing to spend any money, even though it is a legal requirement and it is there responsibility.

As for the Pub co's allowing tenanted pubs to go free of tie this is how they would work it.

Current offering Tied in agreementFree of tie agreement
Rent£12,500 per annum £36,500 per annum
Tie inDraught, bottles, alcopops would be free of tie

We are a wet trade pub and 85% of the business is draught.

Admiral makes it so that a tied in agreement would be your only option and restrict free trade, we do not have enough trade to go free of tie and cover a rent of £36,500 per annum.

Looking into a free of tie agreement I could reduce the cost of a pint by around 17p per pint and still make the same profit that I do now.

My year runs from April to April and I have the latest set of accounts showing that in the latest 12 months we are running at a loss.

The restrictive law needs to change to allow free trade and competition and to stop the average of 25 pubs per week closing.

I have invested nearly £15,000 in refurbishment into this pub and am now at a stage where I can see myself losing the lot.

3 August 2011

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Prepared 6 October 2011