Heath Ball, head of pubs at Dark Star Brewing Co, writes an open letter to publicans about the real impact of the pubs code and why the Market Rent Only option could usher in “a new dawn that will potentially see the last of our great entrepreneurs losing their businesses”.
It was Bruce Willis in Lucky Number Slevin that that brought the ‘Kansas City Shuffle’ to popular culture: When everyone else moves right, you move left. Isn’t that exactly what the pubcos are enjoying under the MRO. We’re all missing the point here. The trade are heralding a new dawn, a new dawn that will potentially see the last of our great entrepreneurs losing their businesses.
Bring in the MRO they cried. Come take our business would have been more accurate. Let’s face the facts, the tie effects most of us who don’t have the funds to buy the bricks and mortar. On that basis, we’re all at the mercy of the ‘golden rule’, that is, he (or she) who holds the gold, makes the rules.
I see Enterprise Inns have said they’re looking to go from 75 managed houses to 800 managed houses. I expect these are going to be the cream of the crop - those people that had great businesses, that the pubcos (and I don’t just mean Enterprise) want. I’d rather have the beer tie than lose my business and watch it get turned into a pubco managed house.
There’s a very real danger that we’re just going to be left with major players in the pub game all knocking out the same branded sites. We will be left with a pub industry that has no soul and where the only winners are the shareholders. With leases that expire in the next five years many are just counting the days to when the pubco take their site back. Just how many leases have been renewed lately?
The tie didn’t have to go, the rates the pubco’s were charging for the beer did. You could’ve still been tied to a brewery, they just needed be reasonable about what they were charging for a barrel.
The question for me is: where is the protection for the tenants that are losing their sites as an unattended consequence of the MRO?
We have the landlord and tenancy act, but it’s a simple clause that means if they are taking the site back to use themselves, they just need to pay double rateable value and for your fixtures and fittings. But remember, they can still hit you with a dilapidations bill at the end of your lease and any money they would owe you (from the rateable value) could very realistically be zero. Remember the agreement most of us have is a “fully repairing and insuring lease” and that money from the rateable value isn’t going to change your life.
I hope I’m wrong, but only time will tell.
