Punch delivers MRO warning

By James Wallin

- Last updated on GMT

Punch delivers MRO warning

Related tags Public house

CEO points to concern over investments.

Recently appointed Punch Taverns boss Duncan Garrood has delivered an upbeat message about the future of the trade, but joined other industry voices in warning of the danger of “unintended consequences” from the new pubs code.

In an exclusive interview with the Publican’s Morning Advertiser’​s sister title M&C Allegra​, Garrood said he had been impressed by what he had seen in his short time with the pubco and insisted pubs have “a bright future”.

He said: “What we have at the heart of Punch is a really powerful partnership — we can offer the support through our variety of packages and our knowledge of the industry to help entrepreneurial licensees who know their communities inside out, create a great pub.

“The pub has survived throughout the centuries because it has been at the heart and soul of its community and its future is in doing exactly that. I sincer-ely believe the great British pub has a bright future... through offering the very best experiences in hospitality that we can.”

Garrood joined Punch in June after six years with Middle East-based retail franchise operator MH Alshaya.

Speaking at last week’s Punch roadshow in Romford, Essex, Garrood said he was keen to keep up a dialogue with the Government over the implementation of the new statutory pubs code, and expected discussions to resume later this month.

He said: “We have to approach this from the starting point that we should be offering such good service and support to our partners that they wish to remain with Punch — that the value they get from the partnership means it simply doesn’t make sense to leave that behind.

“I recognise there will be people that will want to try the alternative but until we see how that will come about, we can’t say how we will manage that.”

Garrood said the inclusion of the MRO (market rent-only option), which allows licensees to break the tie, was “in danger of discouraging investment”.

He said: “At the moment, any investment that is going to pay back in more than five years cannot be guaranteed to make a return, therefore it makes no commercial sense to make that investment. Our responsibilities go far beyond the commercial but we are a business and we need to know that our investments make sound financial sense. In fact 80% of our investments take longer than five years [to pay back] so that puts us in a very difficult position.”

He insisted Punch supported the pubs code but called on ministers and officials to “understand the potential unintended consequences” of the legislation before making it law.

“As someone coming in from the outside and look-ing at this, I think there are unintended consequences already in terms of the discouragement of investment.”

Garrood admitted he was “bemused” at some of the criticism the company had received from vocal licensees and campaigners for pubco reform, particularly following the sale of 158 pubs to NewRiver Retail in August.

“The Punch Taverns I joined is made up of a very passionate, committed, capable group of people who are committed to the continual improvement of our pubs and to serving the communities we are in,” he said.

“Yet anyone looking at a lot of the stuff that is written about us would be forgiven for thinking that we are actively willing our licensees to fail and are only interested in seeing our pubs turned into convenience stores. I find that idea absolutely absurd.

“Quite apart from the fact that it costs me £50,000 every time a publican fails, why on earth would it be in my best interests for a pub to be unsuccessful? I’m furious that it doesn’t reflect the reality of what I have seen so far in this industry.”

Related topics Punch Pubs & Co

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