Pubcos move to remove machine income from rent calculations
As the country's pubcos try to fend off a referral of the industry to the Competition Commission, Bedford brewer Charles Wells became the latest operator to declare publicly it was changing its policy covering machine income.
Following an earlier move by Punch Taverns, which in the run-up to the recent industry 'mediation' meeting announced a number of 'licensee-friendly' initiatives - including the removal of income derived from machines from rent negotiations - Charles Wells said it had reviewed its policy covering retailer agreements on amusements with prizes, skill with prizes, pool tables and jukeboxes.
As a result, the company said that "while it will continue to share machine income, the licensee's income from all of these machines will not be taken into account for rental calculation purposes.
"The company's code of practice will now be amended to reflect this position, in consultation with the BII Benchmark and Accreditation panel."
With the pub industry under the spotlight following the highly critical Business & Enterprise Select Committee (BEC) report, operators are increasingly looking at how they can re-jig the profit balance to a more equitable position.
Removing machine income from rent deals could be the first in a range of changes to lease agreements.
Other companies are understood to be either reviewing their machine income policy or are taking steps to remove it from rent negotiations altogether.
London brewer Fuller, Smith & Turner is understood to have taken the latter route in recent weeks. Midlands brewer Marston's is "looking at everything" in its leases, according to a source, while Kent brewer Shepherd Neame declined to comment.
David Elliot, head of Greene King's leased pub division, said the Sufolk brewer had not rentalised machine income in "the 10 years I have been with the company".
Elliot declined to offer a comment on the BEC report beyond saying Greene King would outline any proposals when it announced its annual results next Thursday (July 2).
Meanwhile Enterprise Inns chief operating officer Simon Townsend said the pubco was "considering a whole range of developments and options and would provide more detailed explanation of their implications to [our] tenants and lessees at the appropriate time".
