A group of leading multiple pub operators have called for the large pubcos to be more flexible in the way they support evolving businesses.

A panel at this week’s Tenanted Pub Company Summit heard from ETM co-founder Ed Martin, who said he owed his career to the tied pub model but felt that the relationship needed to change as companies grow.

He said: “Does a company at our stage really need all the support services? Can’t it just be a straightforward landlord/retailer relationship that doesn’t have all these extras? That would work well for multi-site operators that have their professional base already.

“I understand the need for that support with start-ups but it should be recognised that it’s not needed across the board.”

His view was echoed by Peach Pubs managing director Hamish Stoddart, who said: “There certainly isn’t a differential pricing model that is transparent to us. In terms of dealing differently with a business our side, it’s not much more than crossing off one training course a year.

“It comes down to knowing the right people in the organisation to get the negotiation fair. That opportunity to sort it all out again probably only comes around once or twice a decade, and in that time a growing company’s needs completely change.”

Asked by panel host Ed Bedington if it was therefore fair for pubcos to have a bespoke model to anticipate the changing needs of an individual business, Stoddart said: “They have got hundreds of different models of tenancy, and they are very good at it, so why shouldn’t they adopt to us – their stable customers – that same flexibility?

“We would like a better way of realising some of the benefits from the pubco’s buying power, different ways of financing and more support with some of the statutory stuff.”

Mark Robson, co-founder of Red Mist Leisure, said the benefits went both ways: “There’s a lot of innovation that comes out of companies like ours and some of that can be adopted on the other side as well.”

There was also consensus among the group of a fear that their successful brands and empires could be taken away by their landlords once their leases were up.

“We’re all 10 to 15 years in and it could be done [business taken away],” said Stoddart. “They will have it if they want it in eight to 10 years and you’ve just got to deal with it.”

However, Martin said: “You can’t really complain when you signed the deal to begin with.”

Discussing how the leased and tenanted sector has evolved since he started his business, Robson said: “It scarred me and I was left with a view of tenanted and leased pubs. But there’s been a change in view, which has moved onto the customer,” he said.

“15 years ago it was a bit cloak and dagger and there wasn’t a lot of success and the support wasn’t brilliant back then.

“I was encouraged not to share trading information by others in the trade, but that’s daft. Partnerships work.”

“It was only in 2014 that we took on another lease – we’ve now got 10 pubs and three leases, two of which are with private landlords. My confidence in the leased sector has been restored.

“Standing from the side lines, I think they’ve [leases] changed for the better and there’s a real focus [from pubcos] towards the consumer and an acknowledgement that they needed to be modernised, but that wasn’t the way 15 years ago.”

Stoddart agreed there were some “scarring” moments in the past for him, including an attempt to double his rent after the first year in business, but also pointed to the potentially extraordinary the tied model can provide in a relatively short space of time.

“Pubcos can be positive about making turnover happen and sharing it in an appropriate way,” he said.

Martin, meanwhile, said that as a London-based business, ETM was reliant on leases and said “without the tied model, we wouldn’t have been able to grow”.

“The majority of our sites are with Punch and they’ve helped us to grow. I would not say ‘no’ to a leased business as long as it was right and fair,” he said.

There is no future without cash and a leased model offers start-ups a relatively safe bet when it comes to getting a business up and running, he added.

Having an estate consisting entirely of tenanted and leased sites was not something Robson would consider. “It’s about a blend and the great thing about having a tied pub is the barrier to entry is low and the investment is low, depending on the company you’re with,” he said. “But would I want 10 tied pubs? Probably not.”

He went on to stress that he had never actually made money from a tied pub, saying: “I do know there are some in the sector who have, but the tenant needs to make money out of it and if the pubco is too greedy and the tenant ends up working a 100 hour week, then it’s not sustainable.”

Topics