Earlier this month, Punch Taverns was named Business Enabler of the Year at the National Business Awards its Foundation Tenancy (PFT) lease agreement. Giles Kendall, operations director for Punch and project leader, talks about the develop of the agreement, the challenges the company faced incorporating it and how it has fundamentally changed the way Punch works with its licensees. Feedback from two partners is also included.
The Punch Foundation Tenancy Agreement (PFT) was introduced in May 2012 as a fully supported way for entrepreneurs with limited pub experience to enter the trade as well as existing publicans to gain the skills and business acumen they need to become highly successful business owners.
For Punch Partners taking on an agreement, a refurbished pub is provided by Punch, with full training and support. Partners benefit from low start-up cost and intensive interaction with Punch staff including meetings at least once a week, support from industry specialists, and a modular training programme from which they can graduate after a year.
Under the PFT model, we use our experience to create the right business proposition for each pub. We invest in and equip the premises, using the latest IT systems. We link the business to specialist accountants and insurers, and provide a marketing plan. We also find the right partner to run the business.
There are now 48 operational sites with two of our top three ROI performers out of 400 projects being PFT sites. It is doing really well and proving to be one of our most popular agreements.
It uses the experience from Punch staff to create a ready-made business, find the right Partner to run it, and then provide the Partners with a unique level of support.
What’s different about this agreement is that it has fundamentally changed the way we work with our licensees. The transparency of the open book arrangement means we have direct access to sales data via an up to the minute EPoS system, enabling us to identify the real issues and help licensees make tangible improvements to their bottom line. For me this is genuine partnership and has effectively created a mandate for us to talk openly to our licensees.
A small team of experts were set up to put together the PFT agreement, and this was led operationally by Joanna Hyde who had experience of running her own pub and working as an area manager in the leased and tenanted sector. Jo took all of the ideas and brought it to life so successfully with the first 20 pubs she opened in the second year of the project.
Nationally, many pub businesses fail in the first 18 months. However, none of the Punch Foundation Tenancies have failed since we launched the project in May 2012.
We recognise that not all pub tenants come into the industry with a breadth of financial acumen, so one our priorities was to support our new PFT Partners with approved stocktakers and accountants to ensure they get into a simple routine to control the business. This means that they can then have the comfort of knowing things are under control whilst they apply their entrepreneurial skills to developing the business.
Pubs are a people-business; with the hospitality industry being a challenging sector, which is facing some well-known problems. I believe the National Business Awards judges could appreciate these issues and could see how a model like this could help people enter the industry. We felt that the high levels of personal support we give our Partners on a regular basis and under a unique ‘open book’ partnership, enabled them to grow a strong pub business
We believe this works well for Partners with transferable skills but no previous experience, but is also ideal for old hands wanting to re-skill to meet the challenging new demands of the industry.
Unlike our competitors, we see foundation tenancies as a sustainable long-term model – not just a quick fix for ailing pubs. We currently have 48 PFT partnerships and are aiming for 200 by the end of 2014.
Feedback from Partners:
John Ballard, from the Galleon in Wolverton, Milton Keynes, said: “If it wasn’t for the help and support, I can quite confidently say the business would not have succeeded. The PFT has afforded us the expertise of Jo Hyde, who we can’t thank enough, along with marketing and structure support that enables us to concentrate on running the business and growing our client base. Our pub is in a strong position, which would not have happened if we had not chosen the PFT route.”
Selena Ogden at the Butcher’s Arms, Bishops Itchington, said: “I had barmaid experience and Brian (my husband) had twenty years of pub experience but we had never run our own business before. I completed the Foundation Week training which was very rewarding and eye-opening. The PFT means that all of the support and guidance - from marketing, catering, financials to stock control and merchandising - is all under one umbrella so we can focus on making the pub the place that our locals want it to be.
“The support from Punch has been fantastic. They fully backed our vision for the pub and the business has bloomed massively as the villagers have their local back!”
