Around 70% of McMullen’s tenanted pubs have been enhanced to the standard of its managed houses following a series of “rep and dec” investments, tenant operations manager Gavin Mansfield has told M&C Report.
The Hertfordshire-based company has been moving its 45-strong tenanted estate in line with its managed pubs during major investments that take place every five years.
“I would say that we are probably 70% of the way there,” Mansfield said. “We can now be competitive in the same market place. I think many tenanted companies have neglected their tenancies to the point where their tenancies are a bit behind the managed houses, and we’re keen to make sure that doesn’t happen.”
He said such investments would only come “on the back of recruiting a fantastic operator”.
Eight ‘rep and decs’ are planned for this year, with six completed to date. Examples include the Ram Inn at Hertford, where £150,000, plus the tenant’s investment in fixtures and fittings, was spent transforming it into a “very current, trendy operation”.
A £100,000 investment has been made at the Steamer in Welwyn, Hertfordshire, where former Wetherspoons area manager Dan Tubbs is the tenant. Sales have grown 80% since the investment, which transformed it into a “very modern high street local with an excellent food offering”.
Separately, Mansfield revealed that six tenants have so far taken on pubs under McMullens’ “try-before-you-buy” one-year agreement that offers reduced rents and beer discounts for the first six months.
He expects most to take the company’s full six-year tenancy; two have done so already within the first few months.
The agreement was launched about a year ago. Mansfield said: “It works for both parties in that it enables tenants who are new to the trade to decide if it’s something for them before they make a long term commitment.”
On a couple of occasions the agreement has been extended by another year. He added: “We’re not a massive organisation so we are able to be a little bit more flexible in terms of the agreement, and it works for us.”
Meanwhile, McMullen’s is set to sign up its ninth licensee under the franchise-style Pub Operators Agreement (POA), which sees publicans keep their takings in exchange for a percentage of the pub’s wet turnover.
Takings have grown by 30% on average at pubs on the agreement, he said. “POA is fantastic, it’s been a real success with us in terms of growing income for the business.”
He said it’s easier for tenants to grow their businesses under POA because they don’t have the “pressure” of obligations like paying rent. “Their focus can be entirely on those things that can drive a business forward.”
