Punch's Growth Lease lures 25% of tenants

By The PMA Team A total of 1,100 Punch Tavern tenants ­ one in four ­ have now signed up for the Punch Growth Lease. The increased numbers ­ up by 10% in a year ­ helped Punch push like-for-like profits up by 5%. The lease allows tenants the lion's share of extra profit generated by turnover increase. A 3% turnover increase boosts the leaseholder's profits by 10.3% and Punch profits by 1.3%. For Punch, the lease tends to mean a higher base rent plus a 50% cut of machine income ­ rental income grew by 9% to £60m while fruit machine income jumped by 35% to £6.8m in the company's first six months. One Punch lessee told the Morning Advertiser: "It's not a bad deal if a tenant can carry on increasing his business. Proposals tend to mean higher rent ­ in fact, every proposal I've seen has meant a higher rent ­ with the offer of better discounts if he does well." Across the estate, Punch's leaseholders ­ a total of 66% of the estate including all types of lease ­ produced almost £70,000 profit per pub, while tenants chipped in with about £40,000 per pub. Tenants with agreements of 12 months or less produced a profit per pub of around £28,000 for the company. Beer sales reflected the wider market, with premium and standard lager volumes up by an average of 3.25% while standard ale and premium ale dropped by 2.9%. Stout also declined by 1%. The company's gross profit from beer improved by 8%, suggesting improved terms from suppliers. Punch chief executive Giles Thorley revealed that 63% of tenants had now benefited from food sales, ranging from "the simplest of offerings to award-winning gastropubs". He added this was an area that it had expected to grow. Punch has also identified 676 pubs that would benefit from targeted recruitment and investment and another 141 pubs that should be sold because of higher alternative use value. Profit before tax jumped 17% to £56m, while turnover was up 6% to £218m for Punch's first half year after flotation.