Supplementary written evidence submitted
by Marston's Pub Company
1. RENT AND
BEER PRICING
INFORMATION
We were asked to provide details of the information
which we give to prospective licensees regarding beer prices and
the calculation of rent and estimated profit. We are pleased to
attach our Code of Practice sample price list (appendix 1)[25]
and the calculation sheets from which we have derived the rent
proposal (appendix 2).[26]
We have also included data sheets (appendix 3)[27]
which allow the prospective tenant to weigh up the benefits of
a "low rent, higher beer price" agreement with those
of lower beer price and free of tie agreements (Advance and Ultra
respectively). We would like to draw your attention in particular
to the side by side analysis in appendix 3 marked "page 6
of 7" at the bottom. We believe that these documents show
that we provide a wealth of information to prospective tenants
to enable them to make the right decision on whether to take on
the pub and on what terms.
2. SHARING OF
DISCOUNTS
Giving evidence, Phil Dixon suggested that pub companies
should pass on "25% (of discounts from brewers) net to their
licensees, that would be equivalent, on average, of about £10,000".
We pass on nearly £9,000 of discounts per pub. This, coupled
with a long held approach of fair rent setting, shows that we
are pursuing a policy of building sustainable business partnerships
with our tenants and lessees.
3. RENT SETTING
AND THE
RICS GUIDELINES
All of our rents are evaluated by a team of Regional
Estate Managers in accordance with the RICS guidelines. Our BDMs
do not set rents.
4. PUB RUNNING
COSTS
Because we operate a large managed pub estate and
we supply 3,000 Free Trade customers, we have extensive knowledge
of the running costs of a wide range of pubs. We apply this experience
to our rent calculation models in order to make them as accurate
as possible.
5. SANCTIONS
On the rare occasions that we let down a tenant we
put the matter right promptly and provide compensation where appropriate.
We believe that this is the right way to deal with a mistake because
the remedy goes directly to the tenant. We have just done such
a thing for the former tenant of the Polar Bear in Hull, Craig
Wood, who thanked us for our speedy and fair resolution of his
complaint.
6. PIRRS
We have not had a single rent negotiation referred
to PIRRS which we believe further confirms our fair approach to
the setting of rents.
7. TENANTED PUBS:
BUSINESS OR
HOBBY?
Giving evidence in relation to the sanction of accreditation
being taken away from a code, Kate Nicholls said the following.
"(The sanction) only comes into play if there
is the genuine competition that the previous witnesses claimed
was happening in the marketplace, but the survey that was commissioned
jointly by the BBPA and the IPC shows that three quarters of people
taking on a pub are not making a decision about the pub company
and whether the pub company has an accredited code of practice
They are just making a decision on the fact that they want that
particular pub".
This quotation supports our view that too many prospective
tenants do not consider the business imperatives when considering
whether to take on a pub. We work very hard to ensure that licensees
applying to us consider carefully the pros and cons of running
a tenanted pub. If by doing so they turn away we consider that
to be a success. If the industry is to make progress we must substantially
increase the number of tenants who run a pub as a business, not
a hobby.
8. PUB COMPANIES'
FINANCIAL PERFORMANCE
Giving evidence, Karl Harrison said the following.
"Every single company that is listed on the
stock exchange that is operating tenanted sites, whether it be
Alistair's company, Simon's company, Ted's company, are all reporting
poor performance in the tenanted side".
This is not correct. In our latest results we reported
that the absolute profit generated by Marston's Pub Company was
back in growth year on year. This is a result of the ongoing support
we give to our tenants, fair rents and our innovative new franchise
agreement.
9. FREE OF
TIE DISCOUNTS
Simon Clarke, providing evidence, described how (by
going free of tie) he would "be able to go out and get my
own discounts, and I would expect I could achieve somewhere to
the order of £180 to £200-a-barrel discount".
As a single site operator, and with our experience
of supplying 3,000 free trade customers, we think that these discounts
would be hard to achieve. Our customers receive on average around
£130 per barrel.
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