Marston's innovates in the tenanted divison

By The PMA Team

- Last updated on GMT

Related tags Pubs Marston Beer

Alistair Darby
Alistair Darby
Marston's is trialling an innovative re-working of the pubco-tenant relationship in an effort to create more trust and transparency. The company is...

Marston's is trialling an innovative re-working of the pubco-tenant relationship in an effort to create more trust and transparency.

The company is to launch two new schemes - Pheonix and Apollo - that seek to de-risk running a pub in the case of the former and inject more margin into pubs in the case of the latter. Pheonix has been trialled at ten pubs and is an attempt to breathe new life into pubs not trading well. Tenants will be offered the chance to run a Marston's pub with risk removed in a quasi-franchise arrangement. The licensee will earn 20% of net take excluding machine income out of which staff will be paid. In return, Marston's owns all stock and organises activity at the pub across five nights a week. Tenants face a few safeguards such as being responsible for stock loss but also benefit from a projected business development manager to pub ratio of one to 25-30.

Tenanted division boss Alistair Darby said: "The idea is to regenerate the offer at pubs that are basically good. There's no such thing as a bad pub, just a bad offer." Darby said that he thinks the agreement will suit many of those who apply to run the company's managed pubs. "It's a stepping stone for those that are interested in running pubs." Trials at ten pubs have produced good results and now the company is planning to turn another 80-90 pubs across to the scheme. The Apollo scheme see Marston's planning to inject extra margin worth £100-a-week or £5,000 a year into its pubs.

The company wants to trial Apollo in 50 to 60 pubs within its core estate of pubs on substantive agreements. Tenants would be offered the chance to switch to free trade discount levels from barrel one - bitter at £135 a barrel, premium bitter discount of £135 a barrel, standard lager at £170 a barrel and premium lager at £180 a barrel. Licensees would have the extra discounts rentalised but at a rate that assumes 8-9% decline in barrelage, in line with the market, over the next three years.

A pub with an annual barrelage of 200 barrels that chose to take part in the scheme would be rentalised on just 182 barrels - Marston's takes the projected decline over three years into account straight away. The effect of this is to create the extra £5,000 of income. Darby said: "There is a whole load of extra discount that is not rentalised fully so from day one the licensee is £5,000 better off per annum. This margin is available for licenses to invest in the business. If licensees then out-perform the beer market they generate a lot more margin." Licensees will be required to do their business with the company on-line saving cost for Marston's. Another possible saving for Marston's would be the potential elimination of the need for beer flow monitoring equipment. "There's a real chance here for a more open, trusting relationship," said Darby. "We would expect volumes to be better, for there to be greater tenant stability and to start attracting even better quality tenants." Darby said Apollo resulted from Marston's thinking: "How do put margin into pubs without exploding our own business".

He added: "The question is what kind of things can we put in place that generate returns back at the ranch. With Apollo, we're putting the first foot forward. We think we've got to put an extra £100 a week into licensees' businesses to make a difference in terms of allowing them to invest in something, to turn the dial."

Licensees on existing agreement who take part in the scheme switch by way of a side letter to the existing agreement making the change more straight-forward to implement for both sides.

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