As the Government’s consultation on regulation of the pubco/tenant relationship entered its final week , Enterprise CEO Ted Tuppen wrote to all MPs to warn them they are being misled by “flawed, perhaps misrepresented information” from CAMRA and the All-Party Parliamentary Save the Pub Group (APPSPG).
He said the findings of CAMRA’s survey of 600 licensees (the PMA, 23 May) “are not borne out by the commercial negotiations and discussions Enterprise conducts with publicans every day”.
Tuppen wrote: “We strongly contest the damaging allegations made by CAMRA and urge it to clarify the findings of its research. Our data shows the average profit potential for a publican in an Enterprise pub is £34,000 per year before taking account of the benefit of free living accommodation.
“The data on potential profits is supported by the 2,164 rental negotiations that we have completed over the past three-and-a-half years, where agreed rents average £37,500 per year. Given the widely accepted principle that generally about half of the tenant’s profit goes towards paying rent to the pub owner, these rent reviews support our data showing average profit potential for the publican of around £34,000.”
Tuppen invited analysis of Enterprise’s figures by an independent body and challenged CAMRA to make the same offer.
Referring to its failed ‘super complaint’ to the Office of Fair Trading over the beer tie in 2009, he added: “CAMRA has previously used data in a misleading way to support an argument and I fear that this may once again be the case.
“The reality is that, allowing for some vociferous, self-serving and admittedly effective campaign groups, the vast majority of pub-company tenants understand the agreements they signed up to and, despite the well-documented economic difficulties facing consumer-oriented businesses in the UK, are running successful businesses in partnership with their pub companies.”
And he urged any Enterprise licensees who are struggling financially to “contact their regional manager so that the company can review their circumstances and, if appropriate, offer targeted and discretionary assistance”.
APPSPG chair Greg Mulholland described Tuppen’s comments as “just hilarious”, “remarkably dishonest” and “really quite desperate”.
He derided Enterprise’s use of “average profit potential” figures, rather than actual earnings, and criticised the company for failing to mention wet rent, “which we know is much more than dry”.
Mulholland added: “It seems they are quite worried and are now saying things they simply can’t substantiate and indeed that can be shown to be untrue!”
CAMRA responded stating that the survey commissioned was carried out by CGA Strategy, which is a well-respected independent research company and carried out a similar survey commissioned by the Business and Enterprise Select Committee in 2009 (see CGA statement below).
Licensees were asked in phone interviews: “Approximately what level of personal income/profit do you earn from your pub?”
CAMRA chief executive Mike Benner said: “We are fully assured of the robust methodology behind this survey, which was carried out on our behalf by CGA Strategy.
“While we respect the right of Enterprise Inns to dispute our interpretation of the results, we note that it is doing so solely on estimates of earning potential rather than actual earnings.
CGA Strategy statement:
"As an independent on trade research company, CGA Strategy was initially commissioned by CAMRA at the beginning of 2011 to produce a telephone survey to a randomly selected sample of licensees on the subject of the effects of the pub tie. The project concept and methodology was broadly based upon CGA’s work for the Business & Enterprise Select Committee (BEC) survey of 2009 reduced slightly in complexity and size and additionally covering freehold and free of tie outlets.
"The survey undertaken in April/ May of 2013 was a replication of that produced for CAMRA two years ago with a marginally larger overall set of results plus free of tie lessees. A random total sample of over 850 outlets of which 547 were leased/ tenanted (in comparison to 1,000 within the 2009 BEC survey) was used – this remains a statistically robust number. The sample was broken down into different tenure types for comparative purposes and was proportionally constructed by operator type and TV region to give as broad and fair a representation as possible.
"The turnover and income/profit questions were based on annual revenue of the licensee split into a number of standardised bands – again using corresponding wording and options as agreed with BEC and repeated in the 2011 CAMRA project."