Only eight licensees have taken up the market-rent-only (MRO) option across five of the six pubcos governed by the pubs code since it came into force in July 2016.
An investigation by MCA’s sister title, the Morning Advertiser (MA), showed that across Ei Group, Punch, Star Pubs & Bars, Marston’s and Admiral Taverns’ combined estates of more than 9,000 pubs, only eight licensees have successfully taken a free-of-tie MRO lease in the past 11 months.
The figures seen by the MA show that no licensees at Star Pubs & Bars or Marston’s has taken an MRO deal. Only one Admiral tenant opted for MRO, while three Punch licensees have taken the option and four Ei licensees have taken an MRO lease.
Four of the pubcos also revealed how many licensees had requested an MRO quote since July. Ei tenants made the most request at 171, while 90 Punch tenants, six at Admiral and six at Marston’s made an MRO quote request.
Greene King was the only pubco governed by the code that did not provide data on MROs. Greene King has said it would issue up-to-date figures in its preliminary financial results in June.
An Ei licensee who has been attempting to go MRO for almost six months told The MA that the process was “very complicated” and off putting for licensees.
The operator, who wished to remain anonymous as talks are still ongoing around the MRO offer, which it was claimed was more than double their current rent.
“The Pubs Code Adjudicator (PCA) said it wasn’t happy with my claim because I didn’t make a ‘legal argument’ and suggested I employ a solicitor to write my statement of claim.
“This is supposed to be a low-cost process and I don’t think that the average licensee has got that cash to spare,” the licensee said.
Admiral Taverns has seen six licensees request an offer on an MRO lease since July and only one take up the final option on offer.
Andy Clifford, property and strategy director for the pubco, said that Admiral was seeing “very limited desire” from tenants for MRO.
“The tenanted pub model provides lower risk and lower cost opportunities for individuals to run their own businesses within their community,” he added.
The MRO option was a key pillar of the pubs code when it came into force in July 2016.
Under the code, tied licensees have the right to request a quote on a free-of-tie lease, which would mean they would pay the market rent for the pub.
When asked if the low take-up was a surprise, a spokesperson for the PCA’s office said “the code isn’t just about MRO, it also gives greater protections to tied pub tenants on a range of matters”.
MRO requests and MROs taken since the code came in
- Ei – Four MROs taken out of 171 quote requests (as of 17 May)
- Marston’s – Zero MROs taken out of six requests (as of 19 May)
- Punch – Three MROs taken out of 90 requests (as of 4 May)
- Star – Zero MROs taken, no quote data shared (as of 25 May)
- Admiral – One MRO taken out of six requests (as of 18 May)
- Greene King – No figures provided