News Article Comments : Fit to be tied?

Fit to be tied?

contd..

By the way, in 2000 I paid £180k for my supply tied lease and at the time my GP’s were around 54-55% (I was making a fair profit) today my GP is down to 47% and I sell beer at around 40p a pint more than the M&B pub about 200 meters away. Why is my GP so low? Well, when I signed my lease I wasn’t expecting my landlord to continually artificially inflate the price of my beer so that he can increase his net barrelage profit year on year. FOT tenants don’t have that problem because their market place is competitive. We have to pay the non-negotiated list price from our pubcos. The pubcos are in direct competition with their own tenants because they MUST over hike prices each year to continually appease the city.

OFT watch out – the real truth is imminent

This post replies to Stephen Corbett > Fit to be tied?

Fit to be tied?

Stephen, I have no wish to get involved in a slanging match, however when you say "I wasn’t expecting my landlord to continually artificially inflate the price of my beer so that he can increase his net barrelage profit year on year " it does smack of naivety.I assume that info was in the document you signed ?. There is only one person to blame for the current pubco powerhouse and thats the people who signed and continue to sign unviable or marginal leases. The matter of risk is more complex than simply figures. With the average lessee in and out within 18 months (I understand that this could be for various reasons ) committment has to be factored in. When my business struggles there is no one to blame but me, no BDM, no ties , no big bad wolf pubco ..... just me ! NOW THAT'S RISK ! If you didnt do your homework before you signed, then you cannot expect to change the rules when the wheels fall off.

Ill give you an example of what I see typically

Local community pub wet led, barrelage 80-90, ingoings £25000, turnover £100000, lease £18000 per annum full repair and insure and tied!. I was asked to look at the figures for someone who was interested. Luckily that person came to me , however the person who took it on was not so lucky. Now some 12 months later the pub is closed and yet another court case in the offing !

Its too late for all those that have signed up but not too late for new entrants to dig in your heels and negotiate your deal, or walk away! But to do your deal you must do your homework first. I have nothing more to say on the matter. V

This post replies to Stephen Corbett > Fit to be tied?

Fit to be tied?

I detect a sneering assumption in your tone Martin but you are correct about my conversations with my BDM. They generally involve when are they going to fulfill their contractual obligations regarding repairs to the property. As for price fixing that answer is very simple. If I pay a fixed price for my beer my margin is fixed. If others buy it cheaper they can sell it to undercut my fixed price but it is not a real market price as any shrewd operator would float it to just beat me. Ergo the PUBLIC are paying an artificially inflated price for their beer.

This post replies to martin kay > Fit to be tied?

Fit to be tied?

Vic, I’m sorry that you felt that we were entering into a slanging match; it certainly wasn’t my intention to upset you. I just thought it would be relevant to point out some of the facts that maybe you weren’t aware of.

Having read through my lease agreement on numerous occasions I can officially confirm that nowhere does it state that my landlord would artificially inflate by beer prices to continually increase their profit ratio each year. In fact, my lease agreement is very similar to yours Vic. The only main difference is the inclusion of the supply tie.

Was I naïve to sign such a restrictive document? Possibly. But having been in the Industry for 27 years I didn’t believe that such a huge corporate entity would wish to take down my trousers and then proceed to continually bend me over a barrel. 30,000 tied tenants in this country with many, many more who have come and gone over the years. Were they all really that naive? Lets get real here Vic, the supply tie model could have worked but only if the dominant party had not abused their position of power. They have sold the future potential trading of each and everyone of our pubs and used the billions to aggressively acquire more and more freeholds. Securitisation has killed the industry because there is no chance of going back. They have sold out their tenants because of their greed.

Incidentally, in real terms I’m about £40 a barrel worse off (even with my £42 a barrel discount from the pubcos) over the 8 eight years I have been in my pub. This makes me roughly 40% worse off than my FOT neighbours. (assuming all things are comparable eg barrelage etc)

And just for the record; I did do my homework 8 eight years ago.

But I do agree with almost everything else you have said.

This post replies to Vic Thompson > Fit to be tied?

Fit to be tied?

**NOTE TO MA WEBMASTER**

This forum has a number of repeat entries in it. I have just edited this as my entry was also entered twice. It seems that when you refresh the page, a postback is actioned, which results the content of the last post in the session being re-submitted. I would consider this needs to be looked at (if you used AJAX, you could refresh elements of the page without a postback)

edited by: Tony Preston at: 08/09/2008 23:52:59

This post replies to Gilbert Bank > Fit to be tied?