Mediation achieved more than you might think. Here's the view of Alistair Darby, managing director of Marston's Pub Company.
Fair Pint, the ALMR, CAMRA, Unite, pub companies and so on agree wholeheartedly on a fundamental issue. That's not a headline you will have seen anywhere, but it's true. Everybody involved in the recent industry mediation process cares passionately about the success of people who run tenanted and leased pubs. What those parties have not been able to do is to find one universally acceptable way to do it and that is why the mediation process came to an unsuccessful end.
Thankfully, however, time and effort have not been wasted because the pub companies — through the British Beer & Pub Association (BBPA) — have reached a binding agreement with the BII and Federation of Licensed Victuallers Associations (FLVA), which represent a significant number of lessees. This agreement will make a huge difference to the way everybody operates in the tied pub sector.
"Blah, blah," I hear critics shout. "All talk, no action!" they cry.
My job in this article is to convince you otherwise. I had the privilege of being the chairman of the BBPA working party so I am well placed to explain what we, as pub companies large and small, are going to do to improve things. Importantly, you as individual lessees need to know how this BBPA/BII/FLVA agreement is going to make a difference. This is the question I will be asked as I visit our pubs over the coming weeks.
At the heart of the agreement is an absolute commitment to improve the transparency of rent setting and rent reviews. We will make clear all of the key assumptions that underpin the calculation of fair maintainable trade: how we have estimated turnover potential, the gross margins achievable and the costs that are likely to be incurred in the running of the business. We will also provide a checklist of information that every lessee has the right to know in order to properly assess the profit potential of a pub. Key to this will be absolute transparency about details of the tie, prices charged for products and how any discount schemes work.
We will provide details of the P&L that we have estimated for each pub. This gives the lessee proper information to share with his or her professional advisor to get an independent perspective. And, going forward, we will urge lessees to take such advice. We want and need you to understand exactly what you may be about to sign up to. If we can get to a place where nobody can say after signing up that she/he did not understand the agreement fully we will have made real progress.
We are going to stop including gaming machine income in the calculation of rent. We will also make the terms on which machines are supplied crystal clear.
To underpin this increased level of transparency in rent setting we are enthusiastic supporters of the new Independent Pub Rent Review Scheme, which will offer lessees a low-cost alternative to arbitration in rent-review disputes. We are funding this scheme — a clear signal of our commitment to it.
We will make all the details of any insurance cover available to our tenants and lessees. We will commit to match the price of a like-for-like policy if one can be found cheaper elsewhere so that there can be confidence that we are not charging an unreasonable price.
Where we use flow-monitoring equipment we will explain in our codes of conduct how we operate it and for what purpose. Our codes will comply with a clear standard to be set by the BBPA, which will be accredited by the BII.
We believe that the vast majority of our BDMs are highly skilled people committed to tenants and lessees and pubs. However, in the light of concerns about a small minority of BDMs we will establish standards of competence and publicise how complaints and disputes related to them can be resolved.
Importantly, the BII and FLVA support our drive to ensure that any new lessee entering a pub has gained proper training, has a robust business plan and has taken qualified professional advice. That way we can ensure that the new people entering our trade have the best possible chance of succeeding.
These significant obligations will apply not just to pub companies in their dealings with lessees but also to lessees themselves. We expect any lessee looking to assign his/her lease to abide by the same commitments to ensure that every lease assignee enters a pub with eyes wide open.
To achieve this agreement has required hard work and patience. I believe that it is going to make a big difference to all of us involved in this wonderful hospitality business. What matters now is that we implement these initiatives as quickly as possible and concentrate all of our efforts on the success of our lessees. I for one have had enough of meeting rooms — it will be good to get back into pubs where the real world is!