The decision for a licensee to opt for the Market Rent Only option, enshrined in the pubs code, can be categorised as “a mix of emotions and economics”, Admiral Taverns chief executive Kevin Georgel has told M&C.
Georgel told M&C that over the next six months both pubcos and campaigners for reform needed to take a “responsible and balanced approach” to explaining the realities of MRO to tenants.
He said Admiral remained committed to the tied model and said the key challenge was to communicate that “the shared risk and reward model is as relevant today as it has ever been”.
Speaking to M&C before the publication of the consultation on the revised draft code, Georgel said: “We are far from complacent about how our licensees may respond to the MRO but we do passionately believe that we can make a difference to their business.
“We have got to work harder than ever to make sure the support is relevant and genuinely improves the performance of their business.
“The key challenge is to try hard to ensure all parties adopt a more responsible and balanced approach to the implantation of the legislation. What I mean by that is making sure licensees fully understand what the legislation involves and how it will impact on their business.
“Our critics need to ensure they are also responsible and balanced in how they communicate the reality of an MRO. Because when a licensee opts for MRO there is really no turning back.”
He added: “The decision process for a licensee to take on the MRO can be broadly categorised as the economic and the emotions. There will be some licensees for whom the economics make perfect sense but the relationship they have with their pub company – in term so the support on offer and the share of risk - might well counteract that argument. Conversely there may well be a number of licensees where the economics and risk are less than compelling who still elect for MRO because their relationship with their pubco has broken down.
“We have worked incredibly hard to develop a strong relationship with our licensees. That was born out in the results of the Tenant Track survey and in winning pub company of the year 2013.
“We have increased and improved each year the support we provide to our licensees and we make sure there’s traction to that so it’s genuine support that develops their business. Because it’s really only that provides the counter-argument for MRO.”
