Enterprise scoffs at GMB attack on profit margin

Enterprise Inns has poured scorn on the latest attack on the pubco model from the GMB.

The trade union accused pubcos of making huge profit margins at the expense of their tenants. The Business and Enterprise Committee report found that 68% of tenants earned less than £15,000 a year but the GMB claims Enterprise makes a 57.3% profit margin before tax and interest compared to Tesco's 5.9%. It said Punch's profit margin is 35.9%.

"The pubcos are yet another example of financial engineering by the City gone wrong," said GMB general secretary Paul Kenny. "What a rip off. Even though the pubcos are making super profits at the expense of their tenants they are barely able to meet the interest payments to those who hold their huge debts.

"It is high time that the Labour Government put an end to the pubco model for the benefit of consumers and tenants alike."

However, an Enterprise spokesman said: "Enterprise Inns and Tesco are two totally different businesses. Trying to draw parallels between them is at best ridiculous and at worst deliberately disingenuous. Attempting to make this comparison shows the GMB hasn't got a clue about how the pub industry operates."

Blue Oar Securities analyst Mark Brumby said: "This is definitely a case of apples and pears.

"The gross margin used (57% at Enterprise) is basically rent plus beer sold less the cost of rent and beer sold — and there is no cost of rent — so it's obviously going to be a high number."

Company's operating profit margins​

Tesco: 5.9%

Sainsbury: 3.6%

Morrisons: 4.6%

M&S: 13.4%

Debenhams: 9.6%

BHS: 1.8%

Enterprise: 57.3%

Punch: 35.9%

Stats from the GMB​