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News Article Comments : Fit to be tied?
If the tie goes, the cake will simply have to be cut in a different way, says Clive Williams
Dave Law’s comments (Your Say, MA, 7 August 2008) on my article (That’ll be the day, MA, 24 July 2008) miss the point I was making.
When referring to reviewing rent, I did not imply that a comprehensive rent review would take place. I said that the net income the pubco/brewer would lose as a result of the tie going would need to be put on rent. This is not the same as reviewing the total business opportunity of the pub for rent purposes.
I said: “Pubcos and brewers will need to replace the income lost from tied volumes, and this, quite obviously, will have to go on rent.”
I went on to say that the gross rental increase required (ie, less the overheads saved on the business development managers and any other staff who would lose their jobs if the tie went) would likely be in the region of £36k. Incidentally, if the total business opportunity of the pub was taken into account in recalculat
30 Posts(s) found for this thread: Now displaying page 2 of 3
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Gilbert Bank 03/09/2008 16:29:26 |
Vic, you are not operating a cartel, you are benefiting from one at the expense of your tied colleagues. As for business development, I for one am obligated to discuss with my BDM anything to do with the business that involves anything more than changing a light bulb. This post replies to Vic Thompson > Fit to be tied? |
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kevin o'connor 03/09/2008 16:57:13 |
Why would that be? as the pubcos attract better discounts than mine the reverse would be true as the brewers would be making more profit. This post replies to Gilbert Bank > Fit to be tied? |
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| kevin o'connor 03/09/2008 17:01:48 |
The content of this post is currently under review |
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martin kay 03/09/2008 17:15:40 |
Gilbert, It seems that unless the only thing you do is to change light bulbs, then you have conversations with your BDM on more than barcodes. I don't understand your point on illegal price fixing; they generally charge brewers wholesale price list, which is exactly what they commited to you? edited by: martin kay at: 03/09/2008 17:16:05 This post replies to Gilbert Bank > Fit to be tied? |
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| Stephen Corbett 03/09/2008 17:35:31 |
Kevin, you really are a sad ill informed individual. I’m a tied pubco tenant and I certainly DO NOT ‘see that all property ownership as theft’, In fact you could not be further from the truth. I’m pleased that your freehouse/freehold has slipped through the pubco net and you and publicans like you, are making a decent living from your pub. I have nothing but respect for ‘ANYBODY’ that works hard in this trade and reaps the benefits from all the time and effort that they would have had to put in to be successful. The problem is Kevin, hard work and experience are not the main measures of success when you own a supply tied pub. Other factors that are out of the tenants control determine if the tied tenant will survive or not. Unfortunately, these are issues that you choose to ignore when you make your ill informed remarks. This post replies to kevin o'connor > Fit to be tied? |
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| kevin o'connor 03/09/2008 17:35:36 |
Quote from Simon Townsend Chief Operating Officer of Enterprise "For a tied tenant who feels they are disadvataged then perhaps the answer is to go buy a freehouse" Wise words This post replies to kevin o'connor > Fit to be tied? |
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Vic Thompson 03/09/2008 17:24:38 |
Hi Gilbert, I was a little miffed at being dragged into a battle between the tied guys and their pubco. We are all publicans, the fact that I took a higher financial risk ( and lets face it, it is a higher risk ) should not leave me open to being accused of an 'alright jack'. The freetrade is suffering just the same, how you guys survive on the prices I have seen quoted here per keg, completely mystifies me. The facts remain, you considered the terms and hopefully obtained advice, you signed and agreed to adhere to those terms, now you dont like them and you want to change them. This has absolutely nothing to do with how much I can buy my beer now or indeed in the future. I operate in a freemarket and can choose whomever to supply me. If they want the business, they have to be good quality,competitive with a solid delivery schedule. The pubco will simply review the best way to get the same money from you ( most probably increase your rent). Nobody likes bad news, but thats the way it is. This post replies to Gilbert Bank > Fit to be tied? |
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| Stephen Corbett 03/09/2008 17:55:45 |
These figures are approximate: 56,000 pubs in this Country 33,000 supply tied leasehold 10,000 managed 8,000 freehold 5.000 free houses The number of free houses that are on the market has decreased steadily over the past 10 years or so, to the extent that the ones that up for sale today ere mainly failed ex-pubco freeholds that they have sold off or are very high barrelage pubs that are being sold at premium prices. In short, there are very few free houses that are available that are of any worth because if they were the pubcos would have bought them. This was backed up by the BBPA’s figures (CGA actually) when they said that 54% of pub closures were freehold/free houses. Remember a boarded up pubco pub is not a closed pub. It is in a transitional period waiting for its next tenant. I’m sure that this trend will continue when the BBPA figures for the first half of 2008 are released in the coming weeks. This post replies to kevin o'connor > Fit to be tied? |
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| Vic Thompson 03/09/2008 18:05:22 |
While this has been going on, Joanne has posted on business support requiring help and advice. Can some of the more experienced pubco lessee's help her ? This post replies to this thread |
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| Stephen Corbett 03/09/2008 18:30:55 |
Vic, this low cost entry argument creeps up time and time again and it is a myth that once and for all needs to be dispelled. I agree entirely that the majority of supply tied pubs that are available today are mainly low cost entry and the reason for this is straightforward; they don’t make any money. Any pub, tied or untied, is only worth on average, about 2-3 times its net annual profit. If a pub isn’t turning over a profit it just isn’t worth anything regardless of its lease conditions. The same rules have been in force for many, many years. In the nineties it was mainly free of tie pubs that were available and the same rule applied. Many landlords that were offering pubs for rent (some of these were in excellent locations) were regularly negotiating reverse premium deals to encourage tenants to take their pubs. For example; a new 25year lease, free of tie, with 6 or 12month rent concession. I bought many pubs in this period on very similar deals. Then the pubcos began to dominate and distort the market place. They could not offer reverse premium deals because of securitised debts. FOT rents in the mid nineties were generally between 6-10% of turnover. Today, because of the pubco distortion, FOT rents are at about 15% of turnover the same as tied leases. There are very few FOT pubs available so the scenario appears to be much worse. Vic, risk is generally measured by how much you pay for your business against net trading profit. I would therefore suggest that tied tenants take a much higher risk that FOT tenants. This post replies to Vic Thompson > Fit to be tied? |
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