Making the pubco model work

By Andrew Pring

- Last updated on GMT

Related tags: Fair pint, Licensees, Trade union, Gmb

Pring: war between Fair Pint and pubcos is hotting up
Pring: war between Fair Pint and pubcos is hotting up
The market forces driving pubcos to offer more support to their licensee partners are a template for the future, says Andrew Pring.

The war between leading pubcos and the Fair Pint brigade took another astonishing turn this week when one of the country's leading trade unions, the GMB, entered the fray, lining up firmly in the anti-pubco ranks.

It called for an end to the tie, and accused the pubcos of operating a cartel.

Inflammatory stuff, which the OFT has batted away time after time in the past. Yet who knows what view the Business & Enterprise Committee will come up with when it reports in a few weeks' time? Unconfirmed reports suggest some of its members are inclining towards the GMB line. The Government will surely stick with the OFT view — that there is no monopoly. However, it is another master-stroke by the Fair Pint team to get the GMB involved and keep piling pressure on the Government to address the pub trade's plight.

The GMB has 600,000 members. It no doubt wants a few more. It may well feel that disaffected licensees would make very good recruits. And once it has them on board, it could seek to represent them in disputes with their landlords.

This opens up the nightmare prospect for pubcos of having to handle licensee rent and other disputes with a union rep. It will be the pub trade's version of Life on Mars, with the bosses battling against the workers in a pre-Thatcher timewarp.

Licensees aren't, on the whole, union types. They went into pubs to run their own businesses and make money by being entrepreneurs. For many, Mrs Thatcher is still their hero. They have little sympathy with hard-line union politics or even socialism.

But there will be many who feel the need for someone to champion their cause, and that's why the pubcos need to press on urgently with their own efforts to help licensees through the recessionary storms.

Their granting of discounts and rent concessions to licensees is rising every week. This is the free market at work, with the pubcos responding to the pressures their licensees are under — as best they can.The question, of course, is whether they can provide enough support, given their own financial problems. And the City is still taking a pretty negative view of them, even though Punch and Enterprise shares bounced back strongly last week.

In the battle over the tie, every bit of real help pubcos can give struggling licensees is further evidence that the tie can work. It helps to prove that the tie does not operate purely in the pubcos' favour.

The free market — which is what most people in this business believe in — is forcing change in rent levels and discounts. New people coming into the trade are getting good deals — as are many existing licensees. These terms are a template for how the pubco model could work in the future. Both licensee and pubco have so much to gain from striving for that model.

Related topics: Other operators, Legislation

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