Punch Taverns rolls out new lease agreements
Punch Taverns is to roll out new lease agreements next week which it claims will "demystify" the way its beer prices and rents are linked.
The new agreements, which were flagged in June this year, will link the amount of rent paid with the price paid for tied beer and will be coupled with an online 'buying club' through which Punch licensees will be required to buy products and services.
Initially, around 140 Punch pubs being let in the South East will be offered on one of three new deals - a short term tenancy of five years and two different 10 year leases. This will be followed by a nationwide roll-out in January next year.
Roger Whiteside, managing director of Punch Partnerships, the pubco's leased and tenanted pub operation, said the deals were designed to attract the best operators in the business and achieve the group's goal of being the country's most trusted pub operator.
The leases will be made available to new operators, while existing Punch licensees will be able to convert at their next rent review, Whiteside said.
He added that Punch had yet to work out how it would handle those lessees on existing agreements that were longer than 10 years who wanted to move over to the new deal, although he said he did not foresee such situations "being a big problem".
"The three agreements offer potential and existing partners the chance to determine the level of discount on beers they can get and the level of risk they want to take," Whiteside said. To take one of the new agreements pubs will have to sign up to the Punch Buying Club, which goes live later this month.
"When you take a Punch pub you'll know exactly how the deals work," he added. "We're laying out in the most transparent terms possible what is required when taking on one of our pubs. You can choose the level of risk you want to operate under, how much rent you decide to pay and subsequently how much in the way of discounts you are entitled to."
Whiteside said one benefit of the new lease agreements was that free-of-tie pricing kicked in once barrelage targets were beaten, plus licensees could choose to buy a non-tied beer from a list of 400 progressive beer duty brewers drawn up by Punch.
Another plus point, he said, was the new deals meant licensees would not have to undergo a rent review unless they thought they were being over-rented and wished to have one.
Those pubs taking the higher barrelage target lease would not be required to have Brulines flow monitoring in their cellars.
Punch would also be changing the way it calculated rents from RPI (Retail Price Index) to CPI (Consumer Price Index). Whiteside denied this was installing upward only rent reviews by the back door.
"We think CPI is more consistent and less volatile," he said.
Key points of new agreements
Short term tenancy:
Five years; £65 barrel discount; tied on beer/cider/minerals/machines; no free-of-tie cask ale provision; Punch Buying Club (PBC) membership required; flow monitoring; no online trading requirement; shared repair liability; six months notice on both sides; no assignment
Punch Buying Club Option 1:
10 years+ lease; £120 barrel discount; extra £40 per barrel for every barrel sold over target; tied on beer/cider/machines; buy-one-get-one-free (BOGOF) cask ale provision; PBC membership required; no rent review; flow monitoring; online trading required; fully repairing and insuring; no notice required; assignable
Punch Buying Club Option 2:
10 years+ lease; £160 barrel discount; extra £20 discount for each barrel sold over target; tied on beer/cider/machines; BOGOF cask ale provision; PBC membership required; no rent review; no flow monitoring; online trading required; fully repairing and insuring; no notice required; assignable
