Enterprise Inns' Simon Townsend talks about the lessee/landlord relationship with Hamish Champ

With the obvious exception of Chancellor of the Exchequer Alistair Darling pretty much everyone and his or her dog knows that life is tougher than ever for the UK's 55,000-odd pub licensees.

The smoking ban, supermarket pricing, shattered consumer confidence and a government hell-bent on making life as difficult as possible for pubs are all contributing to the onerous lot experienced by today's licensee.

But there is another factor which a section of the licensee population believes has a debilitating effect on their ability to prosper, namely what many regard as a less-than-equitable relationship with their pubco landlord.

Fierce criticism

Whatever their merits, The Publican's postbag regularly contains complaints from licensees on this subject. Our website is similarly a magnet for the disenchanted, venting their spleen at what they see as an unfair situation, with the beer tie and the level of rents being charged predictably coming in for the fiercest criticism.

Executives at pubcos and regional brewers alike often talk of the need for an open and fair relationship between their lessees and themselves, and senior management at such companies in the UK maintain they are wholly focused on ensuring their licensees are in the best position to make money for both parties.

So what do those at the top of the country's largest leased pub businesses have to say about the situation?

Ask Simon Townsend, chief operating officer of Enterprise Inns, whether he is satisfied that he is not only talking the talk when it comes to ensuring his company's pubs are best placed to prosper but walking it too, and he says: "Fundamentally you've got to have faith in the quality of your line management and the quality of the leadership of the operations teams: two managing directors, 16 divisional directors and 136 regional managers."

Those charged with dealing with the pubs, the regional managers, must have an array of skills to do the job properly, says Townsend.

"They have to go through processes by which they can demonstrate their negotiation skills, challenging situation skills, problem solving skills, business planning skills… there's a whole array of skills that we would expect of them," he says.

"Their line managers are responsible for educating them in those skills and then reassuring the business that they are both competent in and are able to deliver them on a daily basis."

Divisional directors are out in the trade one day a month, says Townsend, accompanying regional managers visiting particular pubs. And they don't just want to go to the new openings or the sites that have undergone a radical capital expenditure overhaul.

"They want to see the pubs where there've been some problems and where a business recovery scheme that's costing us money has been put in place," he explains.

"They'll want to see the full financial disclosure that allows us to validate the investment that we have made; that the retail standards have been put in place, such as cleaning up the site, sorting out the car park; doing the window boxes, painting the front, cutting costs where appropriate and so on."

Open the books

This aspect is key, says Townsend, and one stressed by his boss, Enterprise Inns' chief executive Ted Tuppen, only recently. Licensees will get support, management says, but in return they must open up their books and show they are doing the work asked of them.

"There's a charter," says Townsend, "which is signed up to by the individual licensee that says in return for the £100 discount a barrel on five barrels a week - that's a £500 a week investment that we're making - plus a rent concession, that we expect 'these' things to be done and we are also going to do 'these' things for you."

Tuppen has argued it is reasonable to expect a licensee to open up areas such as a profit & loss account and stock-taking records, in exchange for financial or other types of support.

Townsend says hundreds of his pubs are making use of special customer-facing programmes such as Counterstrike and Traffic Builder, which he notes are "activities specifically based on individual pub-related decisions".

"In return for us giving you support we expect to see certain things done," he adds, "because these things will make a profound difference."

And when things aren't working? "There are situations that are irrecoverable, either by the business being so badly damaged by the incumbent licensee, or because the situation they've got themselves into means they are irrecoverable," Townsend says.

"We then look for ways to help them exit the business within a specified period of time and with integrity. It's about giving someone a way out that gives us our business back."

What actually happens

However, with the best of intentions things can go wrong between what the top brass want to see delivered and what actually happens.

Townsend says that if a licensee doesn't feel they are getting through to their regional manager they can, and often will, escalate it to the divisional director for their pub, rather than simply write to the company about the situation.

"The divisional director will then either back his man because he's interrogated the situation, or, as has happened, realise that our people have made bad judgements. If that is the case, we can help them understand why that was so and how to deal with it better next time," he says.

"There are occasions, however, when we have concluded that some [of our] individuals are simply not good enough - and people who are not good enough do not stay in our business.

"We try and improve them by giving them the necessary support, but if they're not good enough and can't improve they will leave the business."

Meanwhile, Townsend says he sees every single written complaint that comes into the company, as does his boss. "I want to know if that complaint is valid, or are the issues a licensee is raising open to another interpretation and that these are the reasons why we wouldn't provide financial support," he says.

"I want to know that if we rejected their request for assistance did we have good reasons for doing so? Not surprisingly, some people won't show us their books.

"Some people can't show us their books. There can be sometimes very good reasons why we will not, or cannot, or should not, provide someone with financial support or additional resources.

"Some people refuse to provide us with information on how their business is doing but still go to the media and sound off about how unhelpful we are. Some people can't even provide evidence they have stock-taking records."

Townsend talks about having faith in the promises that are made being delivered at pub level.

"The entire integrity of every public statement we make about our business will only stand up if it's delivered on the ground," he says.

"If I haven't got the faith or the confidence that it is being delivered on the ground I could not sit in front of you and say this."

But does he accept that it is more a question of the level of faith which the licensee has in his company that is the issue?

"It's a valid concern and is the most important thing for us," says Townsend. "The quality of our business is first and foremost, and that means recognising and correcting mistakes that are made."

Which sounds all well and good. But then comes the uncompromising bit.

"There are some people running our pubs with whom we profoundly disagree and with whom we will never be able to resolve the issue they have with us in the way they would like, because we believe there is something profoundly wrong with the way they run their business," Townsend says.

"Some lessees have debts through other business activities and we can't let our pubs be run down on the back of things like that. Sometimes other parties put lessees out of business, such as the tax authorities. It's o